China, for long synonymous with cheap exports in categories like toys, apparel, home appliances and furniture has slowly but surely been changing the profile of its exports, with newer, higher value and tech intensive categories edging ahead. In fact, consumers might have already noticed that in categories like Apparel and Furniture, it is no longer China but Bangladesh, Vietnam, Malaysia and the like which make their presence felt more strongly now.
It has been a concerted effort by the Chinese authorities to plan for the future, either by locking up crucial raw material supplies as seen in the case of Lithium, controlling access to its own raw materials and technology for external countries, seen in the case of many rare earth minerals, or investing in massive capacities that make production outside China at scale a daunting prospect without protectionist tariffs, as we have seen in the case of the PV supply chain. Thus, in the same quarter, investment in high-tech manufacturing and high-tech service sectors expanded by 15.2 percent and 17.8 percent when compared to the same period in 2022.
Official data from the Chinese authorities shows that key categories which have moved up at the expense of the aforementioned categories are solar batteries, lithium-ion batteries and electric vehicles. These registered a growth of 66.9 percent in the first quarter(JFM) of 2023. While their overall contribution is still a tiny 2 percent of the overall exports pie, it is rising fast in the well diversified export basket from China.
Coming on the back of the strong growth seen in 2022 when exports of electric vehicles (131.8%) , photovoltaic (PV) products (67.8%) and lithium-ion batteries (86.7%), the sustained momentum is not surprising.
Chinese Customs data shows that the country exported to over 200 countries worldwide in Q1, with their top five markets showing growth rates of over 80 percent. These markets are the European Union, the US, the ASEAN region, Korea and the United Kingdom.
Where Chinese manufacturers have faced trade barriers, as in the case of PV exports to the key US and European markets, they have tried to circumvent those by establishing manufacturing in the ASEAN region in particular, besides raising issues at the WTO.
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