World’s top importer crown comes within reach, but should China be overjoyed?

By Xiao Xin Source:Global Times Published: 2019/11/5 20:08:40

Illustration: Luo Xuan/GT

A decade after China became the world's top goods exporter, it's now time for the nation to consider claiming yet another crown: No.1 importer globally.

With its high-profile import expo giving a tailwind to the nation's imports, China's dominance over the US in this sphere could be achieved in the coming years. 

That achievement would give China more bargaining power to reshape global trade, though it might add another layer of stress for the US which is already living in fear of being surpassed. China, for its part, should not be overjoyed either.

The gap between China and the US in imports seems within reach, especially taking into account signs of thawing bilateral trade ties. 

China's dollar-denominated imports totaled $1.53 trillion in the first three quarters of the year, per Chinese customs data. 

US imports registered $206.3 billion in September, Bloomberg reported in late October, citing US Commerce Department data. 

Adding this to figures from the US Census Bureau which come in at $1.7 trillion in imports between January and August, the US topped $1.9 trillion in imports in the first three quarters. 

With the world's two largest economies closing in on the signature of a phase-one deal that will ease the trade war deadlock, China might regain its imports momentum, lessening the current gap of almost $400 billion that pins it in second place.

The phased deal is expected to see Washington shelving planned tariff increases on Chinese imports and China increasing purchases of US agricultural goods. Imports of US aircraft and high-tech products are also expected under the trade deal.

More importantly, the thawing on the horizon would arrest trade slumps across the Pacific and globally, potentially putting the world economy back on track. 

This matters to China in particular as its trade structure is less balanced than that of the US.

In the first nine months of the year, mechanical and electric products topped China's imports rankings with a 43.45 percent share, followed by high-tech products at 30.38 percent, according to a Global Times calculation based on Chinese customs data. Farm produce imports took up 7.19 percent of total imports.

Additionally, imports categorized as processing trade accounted for roughly 20 percent of the nation's total imports.

This suggests China's merchandise imports are contingent upon purchases of mechanical, electric and high-tech products.

Signs of positive progress in trade talks would therefore bode well for the nation's imports. This is especially the case as China continues cutting import tariffs. 

In a fresh move, the Ministry of Finance announced a tax-cuts plan for imports late on Monday at the second China International Import Expo, which runs from Tuesday through Sunday in Shanghai.

The expo, exemplifying the nation's commitment to trade openness, will also boost China's presence as a global import hub.

It could be any day in the next few years that China unseats the US as the world's top importer in terms of goods. 

If that becomes the case, the imbalanced landscape of China's imports is worthy of attention. 

Consumer goods remain a small percentage of overall imports for China. By comparison, consumer goods including handsets, household goods, apparel, and pharmaceutical preparations made up over 26 percent of US imports in the first eight months, according to a Global Times calculation based on US Census Bureau statistics. This was only narrowly behind capital goods with the exception of automotive goods that include semiconductors and industrial machines.

The numbers speak for a more balanced imports market in the US, currently the world's largest consumer market.

China's imports market has yet to catch up to its booming consumer market, which is forecast to surpass the US as soon as this year. 

Consumption led to 60.5 percent of China's economic expansion over the first three quarters, according to official data, an accomplishment that has little to do with the nation's imports.

There is little demand for imports in the low to medium-end segments of the consumer market, which is by and large self-sufficient, underpinned by China's manufacturing expertise. 

But the nation still pales in comparison to countries such as Japan and Germany in the high-end market segment, meaning there is plenty of room for growth in the upscale section of the market.

A few years from now, China will have bagged more top spots indicative of its economic strength, but tremendous efforts are still required to develop the economy into a truly balanced and sophisticated one. 

The author is a reporter with the Global Times.


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