As the first month of this year saw a 1.6 per cent year-on-year increase in imports from Mainland China to the MSAR, the current second top economic superpower has been named the world’s largest goods exporter as well as the second largest importer, according to the World Trade Organization (WTO).
The value of goods imported to the MSAR from the Mainland in February reached MOP1.64 billion (US$200 million), according to data from the Statistics and Census Service.
This marks the eighth consecutive time the country has ranked as the top goods exporter globally, with the WTO estimating that this year worldwide trade could grow by about 2.4 per cent, coming off 2016 in which it shrank 3.3 per cent year-on-year to US$15.46 trillion.
In the same month, the MSAR saw a 23.4 per cent year-on-year increase in its exports to China, hitting MOP122.47 million, according to the data, reversing a five-month downturn with double-digit drops in exports and demonstrating the first double-digit growth since March of last year.
Not quite 2.4 pct
WTO Director General Roberto Azevêdo notes that despite the official figure for world trade growth increasing 2.4 per cent year-on-year, “because of the high level of economic and policy uncertainty, we are placing this figure within a range from 1.8 per cent to 3.6 per cent.”
The head notes that targeting 2.4 per cent “assumes that governments pursue an appropriate mix of policies and that GDP forecasts will be accurate.”
This falls largely on two main economies, for varying reasons.
“The most trade-intensive components of global demand were particularly weak last year as investment spending slumped in the United States and as China continued to rebalance its economy away from investment and toward consumption, dampening import demand.”
Locally, the dampening was seen mostly in the second half of the year, after a rough first quarter ‘characterised by financial turbulence that affected China and its regional trading partners,’ notes the WTO, pointing out that ‘fears of an economic hard landing and currency depreciation increased.’
Despite the troubles, Chins’s goods exports comprised 13.2 per cent of the world’s total in terms of value, rising above US$2.1 trillion throughout the year, as compared to US$1.6 trillion in imports, according to the WTO.
However, even as economies such as that led by U.S. President Donald Trump turn towards industrial-oriented industries such as coal mining, a new norm is emerging for worldwide trade and its workforce.
‘The fact is that the economy is changing fast — driven by technology and innovation,’ points out the WTO. ‘Eight in ten manufacturing jobs are lost to innovative technologies and higher productivity. It is estimated that 65 per cent of children entering primary school today will end up working in types of job that don’t yet exist. We have to adapt to this new reality,’ it states.
The most recent data from China’s Ministry of Commerce notes that the majority of foreign direct investment (FDI) went into the service and manufacturing areas in February, with total FDI during the month reaching RMB58.6 billion, a 9.2 per cent year-on-year increase.
In addition, some 1,850 new foreign-funded enterprises were set up in the same month, demonstrating a 33.3 per cent increase year-on-year.
Foreign firms are jumping on the bandwagon of central government policies seeking to shape the Pearl River Delta into the next Silicon Valley, riding the wave of innovation which birthed Internet company giants such as Tencent, headquartered in nearby Shenzhen.
As the WTO points out ‘ More trade integration can help make the system more inclusive – connecting new industries and smaller players to new markets.’
Such is the impetus behind the Greater Bay Area – encompassing Macau, Hong Kong and the nine neighbouring cities of Guangzhou, Shenzhen, Zhuhai, Dongguan, Huizhou, Zhongshan, Foshan, Zhaoqing and Jiangmen.
Intimately linked is the One Belt, One Road initiative, linking manufacturing and supply chains with consumers worldwide.
At the China Import and Export Fair, held over this past weekend in Guangzhou, more than half of the foreign buyers and exhibitors were from Belt and Road countries, as noted by the initiative’s official website.
A sales manager from a tech company in Shenzhen participating in the fair, Feng Xiaoli, points out that not only does the initiative improve the scope of potential markets but “because logistics are improving, and the products go through Customs quicker our clients in these countries can receive our products faster.”
Estimates by the WTO point to a predicted 1.45 per cent gain in gross domestic product (GDP) figures by 2020 for the Mainland brought about by improved trade facilitation, resulting in a US$124 billion increase. Exports from the country would also see an 8.83 per cent increase and a US$187 billion gain, notes the WTO.
Primary elements of the WTO’s trade facilitation agreement TFA, that went into effect in February of this year, that could lead to these gains, points out the group, would include elements such as ‘Formalities connected with importation and exportation and transit; Freedom of transit’ and ‘Customs co-operation’ – elements already integrated into the incentive.
In addition, this trade openness correlates to overall productivity, notes the group in its ‘ Making Trade an Engine of Growth for All’ report.
‘A 138-country study attributed large positive productivity effects to trade openness, finding that a 1 percentage point increase in openness raised productivity by 1.23 per cent in the long run,’ notes the report, pointing to estimates that a ‘one percentage point reduction in tariffs on inputs used in a sector improves total factor productivity in that sector by 2 per cent.’
This increased productivity and potential to export further and further abroad can lead to gains near and far, with history demonstrating the possible worldwide repercussions of continued technological advancements in the Greater Bay Area.
‘As much as 15 per cent of Europe’s technology upgrading over 2000–2007 has been linked to increased competition from China,’ notes the WTO report. However, this does not have to be one-sided, as ‘the knowledge a country’s trading partners have access to indirectly benefits that country as well.’
As such, the increased facility of trade between the MSAR and its neighbouring cities, soon to be a mega-region, could not only benefit the territory financially, but also intellectually, if the workforce can receive proper training to keep up with the endless stream of technological advancements and keep its labour close to home.