How many swallows make a summer? Sectoral evidence of China’s export recovery
ZEITGEIST SERIES BRIEFING #46
Contrary to reports, evidence from official sources reveals there is no broad-based Chinese surge in exports at the sectoral level. Four out of 98 Chapters (sectors) of the UN Harmonized System of Products each contributed more than 10% to the export growth seen from Q1-Q3 2023 to Q1-Q3 2024. Moreover, by the end of Q3 2024 only 3 of the 20 largest export sectors (Chapters) have seen the total value of their exports exceed prior peaks.
Pity the journalist charged with turning the closely-watched monthly release of Chinese export data into interesting fare for readers. You cannot blame them for selecting sectoral statistics to illuminate one or two pieces of a sprawling, complicated story. The question is just how representative are the sectors highlighted? As Aristotle cautioned long ago: “One swallow does not a summer make.”
In today’s highly charged trade policy climate, such framing matters. As reported in Briefing #43, a pervasive narrative has developed this year that China is flooding world markets with exports in order to accelerate its rate of economic growth. Using aggregate Chinese export data collected by Trade Data Monitor, one of us showed that China’s exports are recovering to previous highs, not breaking new records. In this briefing we dig deeper, examining Chinese sectoral export data.
The World Customs Organization groups over 5,000 product categories into 98 Chapters of its Harmonized System. Think of these Chapters as sectors. One Chapter is called Cereals, another Iron & Steel. This system applies to goods only.
Monthly Chapter-level export data is currently available for the first 9 months of 2024. To benchmark this year’s sectoral export outcomes, we calculated the total exports by HS Chapter for the years 2021 through to 2024. We focused on the 20 Chapters (sectors) with the largest exports in 2021, the first year after COVID-19 hit.
To see how similar export growth rates were across the largest 20 sectors in 2024, we calculated the percentage increase in the total value of exports from Q1-Q3 2023 to Q1-Q3 2024. We also calculated each sector’s contribution to the share of total export changes witnessed in these 20 behemoth export sectors. Figure 1 plots the former against the latter.
Figure 1: Most of the largest 20 Chinese export sectors witnessed growth in overseas sales during Q1-Q3 2024—but only four contributed 10% or more of overall Chinese export growth.
Seven sectors lie in the red shaded region implying the total value of their exports fell this year. Four other sectors (chapters 84, 85, 87 and 98) break away from the pack—they witness not only export growth but also contributed 10% or more of the total changes in shipments abroad in the largest 20 export sectors. Only one sector (ragbag [1] Chapter 98) saw export growth this year in excess of 15%. In this context, here is Aristotle’s swallow. A broad-based export surge this is not.
For each behemoth Chinese export sector, we also investigated whether the exports during the first 9 months of this year exceeded the largest comparable total for 2021-3—that is, whether total exports this year exceeded the prior peak. Figure 2 reveals this is the case for just 3 out of the 20 sectors. The notion that many Chinese sectors are breaking record levels in exporting is misleading. If anything, sectoral data reveals that Chinese exports are recovering (in some cases, struggling to recover) to previous highs. Such evidence casts Chinese competitiveness in a different light.
Figure 2: Only three of the top 20 Chinese export sectors have fully reversed retrenchment during 2021-2023.
Source for both charts: Trade Data Monitor (obtained from reports from Chinese Customs.)
Simon J. Evenett, an international trade economist, is Professor of Geopolitics & Strategy at IMD Business School, Switzerland. He is also Founder of the St. Gallen Endowment for Prosperity Through Trade, home of the independent monitoring initiatives Global Trade Alert, Digital Policy Alert, and the New Industrial Policy Observatory and Co-Chair of the World Economic Forum’s Global Futures Council on Trade & Investment (2023-2026). John W. Miller is Chief Economic Analyst at Trade Data Monitor, and former chief global trade correspondent at the Wall Street Journal.
1
Ragbag because this “catch all” Chapter includes products of different types (as does Chapter 99 for that matter). What is likely driving the export growth in Chapter 98 are shipments whose value falls below a certain monetary threshold and are exempt from imports tariffs. Interestingly, the increases in such imports have been the subject of Congressional action this year in the United States. See also this 13 September 2024 statement from the White House.