China's foreign trade: trade balance development

Thanks to a strengthening economy, China's foreign trade and economy are pulling past the western industrialized countries and positioning themselves in a leading role.

Today the People's Republic is the second largest economic power in the world, not least because of its flourishing foreign trade.

This development was unimaginable 40 years ago.

At the beginning of the 1980s, reform politician Deng Xiaoping undertook to transform an economically dependent and completely impoverished state into a “socialist market economy”.

This Chinese-style concept allows for private initiative as well as the pursuit of profit - because, according to the official interpretation, these steps should ultimately drive the economic success of socialism.

China's foreign trade: a world power in 40 years

At the beginning of the 1980s, China was a spent economy. The decades-long endeavor to build an economically independent nation on the basis of capital-intensive heavy industry based on the Soviet model had failed. The turnaround initiated by Deng Xiaoping to labor-intensive production processes and a realignment with market-economy features brought success. The method of expanding from a single point to a large area, initially venturing out of special economic zones and onto the international trading platform, turned out to be perfectly tailored to the situation in the country. Later, the rules of the special zones were extended to the whole country. With its low production costs, China attracted more and more foreign companies looking for contract manufacturers. China became the world's workbench.Many companies from Hong Kong and Taiwan in particular invested in factories in China, and companies from all over the world were added later. In addition to exports, the domestic market gradually gained in importance due to the increasing purchasing power of the Chinese. Today, in addition to simple light industry products, China is increasingly exporting higher-quality items such as electronics and smartphones.

China's booming trade balance: imports and exports are important for Europe

For the European Union, the People's Republic of China became the most important trading partner in 2020 despite and because of the corona pandemic.

EU exports to China rose by 2.2 percent to 202.5 billion euros compared to the previous year.

The demand of a growing Chinese middle class is:

• European automobiles

• Luxury goods

Imports from China into the EU rose by 5.6 percent to 383.5 billion euros.

Chinese foreign trade particularly benefits from the manufacture of relevant products, including:

• medical masks

• further equipment and accessories from medical technology

• IT products and electronics

This puts China behind the United States - exports from Europe to the USA fell by more than 8 percent in 2020;

Imports from the USA to Europe even increased by more than 13 percent.

China's foreign trade as a driver of global growth

China proved to be the most important driver of growth in 2020 not only in terms of exports and imports to and from Europe - the People's Republic was also able to overtake other economies in global trade.

Since China overcame the corona pandemic quickly, it was the only major economy able to increase its gross domestic product in 2020.

As a result, exports increased by 3.6 percent.

Imports fell slightly by 1.1 percent.

So China's trade surplus with the rest of the world grew.

China was able to claim a sixth of global exports in 2020.

China's economy will also get off to a strong start in 2021.

That was expected - experts expect Chinese exports to increase by around 40 percent.

This value was even exceeded in January and February 2021 compared to the same period of the previous year with 60.6 percent - but this is also due to the weak quarter of the previous year: At the beginning of 2020, the corona virus was still raging in China.

Imports also rose by 22.2 percent.

China: continuity with slight growth in Asia

In the exchange of goods with neighboring countries in the Asia-Pacific region, China's exports and imports not only remained stable in 2020, but also increased slightly. Even exports to the United States grew by around 8 percent, despite the repeatedly invoked trade conflict. The People's Republic is now the most important and largest trading partner for its neighbor India.