Analysts are tentatively calling it “peak China”. The country’s position as the leading global exporter for the past two decades has been dealt a blow after it lost ground to the US in the first six months of this year.
America became the bigger supplier out of the two superpowers to eight countries over the first half, including France, Austria, Zimbabwe and Lebanon. China added just three entries to the list of countries where its exports eclipse the US: Bhutan, Luxembourg and Venezuela.
The shift has raised the prospect that China has reached the limits of its global trade domination, allowing others, including the US and India, to increase their shares.
Maarten-Jan Bakkum, senior emerging markets strategist at NN Investment Partners, said this reversal may be a sign of “peak China” in terms of global trade. He added: “The big question for the next five to 10 years or so will be whether India will be able to gain share from China.”
After joining the World Trade Organization in 2001, Beijing usurped the US as the leading goods supplier to most of the world. In the first half of 2018 it exported more than the US to 174 countries, while the US was the larger goods supplier to just 51, according to analysis of the IMF’s Direction of Trade Statistics database by Pictet Wealth Management.
“China has become this massive manufacturing and export powerhouse over the past 20 years,” said Thomas Costerg, senior economist at wealth manager Pictet. But the country could be “a bit squeezed and losing some of its lustre”, he added.
China is seeing more competition for low-value goods from the likes of Vietnam and the textile exporters of south Asia. Beijing is increasingly focusing on higher-end products, but the US remains a tough competitor in this area of manufacturing thanks to its strength in fields such as capital goods and transportation equipment, added Mr Costerg.
The long-running trade war has also played a role in China’s export erosion, with the dollar value of China’s goods exports declining in the first 10 months of this year compared with the same period of 2018, according to Chinese customs data. The trade spat has seen multinationals such as Samsung Electronics, Nike and Cooper Tire & Rubber shift production to Vietnam.
Mr Bakkum said the opening up of the vast Chinese economy after WTO accession meant Beijing had pushed other exporters aside in an era of globalisation and free trade.
“The Chinese had it planned, but whether the rest of the world really realised how quickly the Chinese would gain market share, probably not. That is backfiring a bit now,” he said.