UN says China's trade influence could be reversed due to new tensions

China will try to depend more on its internal demand than external demand to feed its economy, according to the organization.

A UN analysis published this Tuesday indicates that China's leadership in global exports, which has lasted for more than ten years and has been partly the result of its adaptation to global production chains, could recede in coming years due to the global tensions and other factors.

According to an article published by the United Nations Conference on Trade and Development (UNCTAD), “global export leadership may have reached its peak,” as current geopolitical tensions “could reverse more than 20 years of hyperglobalization process.”

An increase in tensions between the Asian giant and the United States (USA) or the European Union (which in April issued its first trade sanctions against Beijing since 1989) “could lead to a deglobalization process with great implications for large exporters.” like China,” point out Unctad economists.

Other indications that the organization points out to predict a reduction in Chinese commercial power are the increase in labor costs in that country, which is already producing a relocation of some production processes to other countries, such as neighboring Vietnam, another “miracle.” “economic” recently.

At the same time, China itself is trying to depend more on its internal demand than on external demand to feed its economy, "and Chinese imports could increase more than exports, which will reduce its share in the global economy," notes the analysis of Unctad.

Experts remember that in 2020 the pandemic showed the importance of China in the global production chain, since in the first months the paralysis of many industries in that country caused supply problems in many sectors, when the first cases of COVID-19 They took place in the Chinese city of Wuhan.

However, the economy of the Asian giant has recovered faster than those of other latitudes from the pandemic, and in the first quarter of 2021 its exports have grown by 50% year-on-year (a percentage that must be taken into account, however, which was based on very low figures in the first quarter of 2020).

In 2020, Chinese participation in the global economy increased to almost 15% of the total.

Unctad argues that China's rise to global trade leadership has rested mainly on two pillars: the emergence of global production chains (known as "globalization") in the 1990s, and the country's entry into the World Trade Organization (WTO) in 2001.

The rise has not been without trade conflicts with China's main partners, due to suspicions of abuse of state export subsidies, intellectual property violations or misgivings about Chinese currency policy, recognizes the Unctad analysis.