Developing partnerships in emerging markets

• Source: Global Times
• [02:31 August 13 2010]
• Comments

By Wang Di

According to the General Administration of Customs of China, July saw China's largest gain in its trade surplus in the past 18 months, with a significant increase in both exports and imports. The total trade volume with foreign countries rose 40.9 percent from the same period last year.

A comprehensive analysis of China's foreign trade performance suggests that subtle changes are taking place across China's trade spectrum.

Trade volume is increasing between China and emerging markets. Almost all those markets are outper-forming China's traditional major trading partners, like the US and eurozone countries.

Trade volume between China and ASEAN rose by 49.6 percent. In particular, trade with Indonesia and Malaysia both increased by over 60 percent. Countries like South Africa, Brazil and India all enjoyed a surge in foreign trade with China, with increases of over 50 percent.

As the US and EU are still dealing with the possibility of a second downturn and persistently rising public debt, most countries in emerging markets have found their way out of recession.

The stunning trade performance of emerging markets underscores the role of foreign trade diversity.

China used to rely on the US and the EU as its traditional foreign trade partners. The close trade relationship is the product of a West-dominated global economic structure, as China supplies the goods that the West wants, in a highly efficient but unprofitable way.

With China's improving productivity and US and eurozone countries consumers' considerable demands in the global economic model, trade between them seems to be set in a fixed pattern. However, as the global economic structure transforms itself in the aftermath of recession, China may seek opportunities to develop future markets to trade with.

As China seeks to restructure its domestic market, reduce pollution and secure sustainable development, it has to find a way to increase trade volume with emerging markets, which need China's vast productivity in manufacturing and rapid develop-ment of technology. The trade figures suggest that this trend is growing.

The saying "do not put all your eggs in one basket" fits China's situation well. As globalization is flattening the world, China has perceived that the crisis originating on Wall Street could also damage the Chinese economy. This will happen if China over relies on the US and eurozone countries.

As China emerges as a new power, political friction with the West may also frequently jeopardize trade, harming both China and the West.

By diversifying China's trade partnerships, China and the West may be more shrewdly able to cope with their problems.

Currently, the US and eurozone countries will still be the biggest partners for China's trade. Nevertheless, the thriving markets and growing partnerships with emerging countries will offer China great opportunities to better its domestic markets and broaden its trade horizon.