The economic data published by China’s government has always struck most observers as kind of funny – and not in the “ha, ha” sense. And Beijing’s last few batches of trade figures have been no exception. Still, through all the bizarre seasonal adjustments that China claims to make at this time of year in order to account for its lunar new year holiday, and for all its other well-established statistical shenanigans, shines one key point: Contrary to endless predictions that China is shifting its economic model to domestic demand-led growth, it’s clear that the PRC is actually getting more dependent on exports, and especially net exports (trade surpluses).
As I noted in this January post, although in recent years, exports as a share of China’s gross domestic product (GDP) have fallen , China’s growth rates have fallen faster. So although there’s less growth nowadays, more of it has been generated by overseas sales.
At that point, we were still waiting for the final 2014 China trade numbers. Now we have them. The country’s trade surplus shot up just under 67 percent from 2013 levels – from $227.55 billion to $379.53 billion. Exports grew from $2.21 trillion to $2.34 trillion. But growth slowed from 7.7 percent to 7.4 percent – the worst pace in 24 years.
The trend, moreover, has only intensified during the first quarter of this year. China’s trade surplus has shot up from $16.58 billion between January-March, 2014 to $123.68 billion during the January-March period this year. That’s 7.5-fold growth! Exports are actually down quarter to quarter, by 2.71 percent, from $528.35 to $514.02 billion. But imports fell off the cliff. Even more revealing: The first quarter growth data, set to come out tomorrow, are forecast to be about seven percent – below even the multi-decade low hit for the full year last year.
This heightening export dependence is especially important when you think about the recent debates about whether the world needs to accommodate the rise of China as-is, or insist on better behavior before endorsing, for example, its new Asia infrastructure bank or its demands for more influence in existing international institutions (which have also been made by other so-called emerging market countries). Because it’s a powerful reminder that, despite all the hype about the admittedly stunning progress it’s made on so many fronts, China still needs the rest of the world – and especially the wide open, gargantuan U.S. market – much more than the world needs China.