Recession improved China’s export position

Recession improved China’s export position    The huge downturn in global trade during the past year has obscured the fact that China has gained market share in exports, Paul Bingham, an economist with forecasting firm IHS Global Insight said Tuesday.
   The Asian manufacturing giant passed Germany last year to become the world’s leading export nation measured by value of goods sold, according to government and industry statistics released this week in both countries.
   China’s total 2009 exports were more than $1.2 trillion. That was ahead of the $1.17 trillion forecast for Germany by its foreign trade organization, BGA. Germany, with a much smaller population, still ranks ahead of China in per capita exports.
   China technically never ran into a recession of its own thanks to a $586 billion government stimulus package designed to spur infrastructure work and maintain employment. China’s economic growth slowed this year from about 10 percent earlier, but the government is forecasting full-year GDP of 8.3 percent. The decline of consumer spending around the world hurt exports in many regions, but China’s low price products remained more in demand even as its total export volume fell from the previous year level.
   China’s gain in market share is tied to the fact that officials shifted policy from using multiple currencies as reference points in favor of pegging the renminbi to the dollar to keep it from falling against the dollar as the global financial crisis gained steam, Bingham said at the Transportation Research Board’s annual conference in Washington.
   “And as the dollar declined in value since its peak in 2008, it’s actually made the Chinese currency more competitive against some other exporting country economies. Which means they’ve actually gained market share in some categories even though their normal level of trading declined,” Bingham responded to a question at a freight industry panel. “So the China price is still at work.”

Bingham

   Eastern Europe, which previously was a hot export market, is one area that has lost some export business to China during the recession as the euro appreciated against the renminbi, Bingham elaborated after his presentation.
   China surpassed Germany as the third-largest economy in 2007 and is quickly moving up on Japan as the second-largest economy after the United States. Another outcome of the recession is that China will become the largest economy in the world by about 2023, according to a revised forecast by IHS Global Insight. The consulting firm previously predicted that China would become the world’s largest economy by 2050.
Bingham said the accelerated growth is also a function of the government’s massive effort to develop the interior regions of the country away from the coastal hubs, which will open more of the country to participate in domestic and export manufacturing. ‘ Eric Kulisch