Chinese Exports: Overview
Chinese exports have historically been a vital part of the country's economy, significantly contributing to its growth, especially since the turn of the millennium. The United States is a key market for Chinese goods, accounting for about 19% of its total exports, followed by other Asian countries such as Hong Kong, Japan, and South Korea. Over the years, the diversity of Chinese exports has expanded from traditional items like silk and ceramics to a wide array of modern products, including electronics, clothing, and agricultural goods.
However, the Chinese export sector faces challenges, including concerns over product safety that have led to numerous recalls, affecting consumer trust in Chinese-made items. Additionally, economic fluctuations, such as the global financial crisis of 2008 and subsequent trade tensions, particularly with the U.S., have impacted export volumes. The COVID-19 pandemic further complicated the landscape, initially reducing demand for many exports but later positioning China as a crucial supplier of medical equipment and supplies during the crisis. Understanding the dynamics of Chinese exports provides insight into both the economic strategies of China and the complexities of its global trade relationships.
Chinese exports overview
For thousands of years, China’s export of goods has been a key component of its economy. A large portion of China’s economy is driven by its exports to other nations, particularly the United States and other Asian countries. Demand for Chinese-made goods has created a boom in the Chinese economy since 2000, and is expected to play an important role in China’s continuing economic growth in years to come.
However, the Chinese export business has experienced its share of problems, due to a variety of factors. Concerns over product safety has led to a number of product recalls and periodically tarnished the reputation of Chinese-made goods in the US. Additionally, global financial problems beginning in late 2008 led to a general decrease in consumption of consumer goods worldwide, which reduced the demand for many Chinese-made goods. From that point, exports generally rose while declining periodically, totaling $2.49 trillion in 2018. Around that time, China's export business began facing challenges that included a protracted trade war with the United States followed by the coronavirus 2019 (COVID-19) pandemic.
Understanding the Discussion
Food and Drug Administration (FDA): The United States government agency responsible for overseeing the safety of food and drug products made available in the US, whether imported or domestically-produced.
General Administration for Quality Supervision, Inspection, and Quarantine: The department within the Chinese government that is responsible for monitoring the health and safety aspects of food and other products in China.
Product recall: An action taken to remove certain products from store shelves when there is a concern about the safety of the product. Some recalls are mandatory, meaning that the risk is sufficiently high enough that the US government orders all of that product to be removed from stores. Other recalls are voluntary, meaning that retail stores have a choice as to whether they remove the item from their shelves.
State Food and Drug Administration (SFDA): The Chinese government agency responsible for overseeing the safety of food and drug products made in China.
History
Trade with China has a long history, dating back thousands of years and including many different trading partners. Long ago, popular exports included luxury items such as ceramics, porcelain, and silk. Over time, China’s exports expanded to include consumer items such as rice, grains, tea, paper, and cloth.
Historically, some of China’s most popular trading partners included East Asia, Northern India, Iran, and the Mediterranean. The geographic location of these areas on the water led to the establishment of popular shipping routes to and from China, sometimes referred to as the “Silk Route,” named after one of China’s most popular exports. However, trade was certainly not limited to this shipping route, and Chinese goods from this era have been found in spots as remote as Mongolia and Siberia.
With the notable exception of certain portions of the Ming Dynasty (1368–1644), which at times focused on domestic activity to the exclusion of foreign trade, exports have been an important part of the Chinese economy for most of the region’s lengthy history. Since it is such a large and varied country, China has many natural resources, and the ability of its people to produce handicraft items has been valued for centuries by consumers around the world.
Chinese Exports Today
In modern times, exports continue to be an integral part of, and have been the key to expanding, the Chinese economy. The total amount of global exports from China has skyrocketed in the past decades, increasing from $194 billion in 1999 to more than $1.5 trillion in 2010 and almost $2.5 trillion in 2018. As of 2018, the US remained the largest importer of Chinese goods, receiving around 19 percent of China's exports. Following the US, China’s greatest export destinations are Hong Kong, Japan, and South Korea.
Since the early days, Chinese exports have grown to include more agricultural items such as fruits, vegetables, and nuts, as well as manufactured products such as processed foods, clothing, toys, and electronics. In 2010, the top exports from China to the US included electrical machinery and equipment, power generation equipment, toys and games, and apparel. Many well-known American companies manufacture their products in China, or use parts that are manufactured in China, including Black & Decker, Goodyear Tire & Rubber, Dell, and Ford.
The importation of Chinese goods into the US is a frequently discussed topic for a variety of reasons. Two of the most hotly debated issues with respect to Chinese imports include the impact of inexpensive, Chinese-made goods on US manufacturing operations, and the safety of imported Chinese products.
With respect to prices, Chinese-made goods are often less expensive than their US-made counterparts because the manufacturing costs are lower in China. Laborers are paid low wages, and the savings is ultimately passed on to the consumer. This leads to mixed results: On one hand, US consumers love their “bargains,” and frequently patronize stores such as Walmart that sell mostly imported goods for low prices. On the other hand, higher demand for inexpensive imported goods has decreased demand for higher-priced domestically produced goods, which has led to the closing of many US-based manufacturing facilities and an accompanying loss of jobs in the US manufacturing sector.
An additional concern with regard to Chinese exports is product safety. In 2007, Chinese exports came into the spotlight in the US as a result of widespread safety recalls. These recalls affected popular items such as children’s toys, which were found to contain lead paint, as well as food and health products such as toothpaste and pet food that were contaminated with poisonous substances. These safety lapses fueled US concerns about the safety of the products being imported from China, and demands were made for stricter controls about products received into the US.
In response to these recalls and safety concerns, the US Food and Drug Administration (FDA) agreed to step up testing of consumable products entering the US from China to prevent tainted products from reaching store shelves. Additionally, the FDA sought to work more closely with Chinese farmers and manufacturers to prevent contamination problems at the source. An important component of this effort has been cooperation with the Chinese State Food and Drug Administration (SFDA) and the General Administration for Quality Supervision, Inspection, and Quarantine, which are responsible for overseeing food and product safety within China. It is the hope of both governments that the goods produced in China and shipped to the US will be safe and of good quality, and both countries have at least stated their commitment to working toward this goal.
Due to the global financial crisis, which began in 2008, the Chinese export business experienced a significant decrease in revenues. In early 2009, exports from China were showing decreases between 17 and 22 percent from the same periods in 2008. During the global economic slowdown, demands for consumer goods decreased overall, which had a particularly significant impact on China due to its economy’s heavy reliance on exports. Despite the impact of the global financial crisis, China’s GDP still increased during both 2009 and 2010. However, in 2011, global inflation began to result in a gradual slowdown of exports from China. Exports climbed again, but hit a two-year low in early 2014. However, in December 2014, exports hit a peak of $227.5 billion. A readjustment in the Chinese economy saw exports fall to $144.5 billion in March 2015, but by September exports had risen past $200 billion again. In October 2015 exports were nearly 7 percent lower than the year before.
After Donald Trump, who had run for the Republican presidential nomination partly on a platform of taking a more hard-line approach to the United States' trade relationship with China, was elected president in 2016, the United States remained a crucial destination for Chinese exports but renegotiations of terms and increased tariffs enforced by the Trump administration put a strain on the countries' trade relationship in subsequent years. When Trump's administration began implementing rounds of tariffs, including those of 25 percent, on imported Chinese goods in 2018, the Chinese government retaliated with tariffs on US imports. The two sides agreed to enter into negotiations regarding the issues behind such escalation, with the US citing a need to protect intellectual and technological property as well as job security, but by 2019 it was reported that China's exports to the United States had declined compared to previous years as tariffs continued. Though an initial agreement was reached in January 2020 that lifted some of the imposed tariffs on Chinese imports in the United States, other tariffs on many imported Chinese goods were kept in place. Additionally, China, along with other countries, began experiencing a decline in export demands by May of that year due to the lockdowns ordered amid the ongoing coronavirus 2019 (COVID-19) pandemic that had begun in China in late 2019. To compensate, China became one of the leading exporters of medical supplies needed for virus response efforts.
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