Exports continue to be a crucial driver for China to achieve its economic growth targets this year, said Tang Yao, an associate professor of applied economics at Peking University's Guanghua School of Management.
Although China's "new trio" – electric vehicles, lithium-ion batteries, and photovoltaic products – have recently performed well internationally, sustaining high growth rates may be challenging due to the sluggish global market and rising trade protectionism, according to the professor.
"After unprecedented rapid development, the relationship between China's economy and the world's needs rebalancing," Tang noted.
Tang used the manufacturing sector as an example, which he referred to as the foundation of a modern industrial system. China's share of global manufacturing value added rose from 8.6% in 2004 to 30.7% in 2022, an increase of 22.1%. In contrast, the G7 countries' share fell from 57.2% in 2004 to 35.8% in 2020, the latest year available in the OECD's database. The share of manufacturing value added in countries outside China and the G7 has remained largely unchanged.
"The majority of the share lost by the G7 has basically shifted to China," Tang pointed out.
Tang highlighted several challenges currently facing China's foreign trade environment. These include trade restrictions under the pretense of environmental protection, such as the EU's Carbon Border Adjustment Mechanism; trade restrictions using national security as an excuse; unfounded accusations from the US and EU about China's so-called "overcapacity"; and expanded trade investigations and embargoes by the US, such as the Section 301 investigation into China's shipbuilding industry and actions against TikTok.
In response to increasing trade protectionism, Tang believes Chinese manufacturing should both "go global" and "move up," which means accelerating outbound direct investment in the manufacturing sector and advancing the industrial and value chains to overcome the relative downstream and disadvantaged positions of some industries in the international division of labor.
Tang suggested that some mid- and downstream production processes, which are sensitive to factor prices and need to be close to consumer markets, could be relocated abroad to reduce domestic manufacturing value added. Meanwhile, upgrading traditional industries, actively developing emerging industries and planning future industries will help manufacturing move up the value chain and industrial chain.
"During the 15th Five-Year Plan period (2026-2030), China's share of global manufacturing value added should be maintained at 28% to 30%," Tang foreshadowed.
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