China | No signs yet of a decoupling from the rest of the world
We recently concluded that, judging by China’s export performance in the last two years, there is little evidence so far that developed countries are decoupling from the country. But what about decoupling by China?
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- The importance of international trade to China’s economy has declined since the mid-2000s, driven by relative price changes and the economy outgrowing international trade.
- China’s real overall imports started to lag total final expenditure in around 2015, due to a sluggish processing sector. But “normal” imports used in the domestic economy have continued to grow, broadly in line with domestic demand.
- Nonetheless, some countries have done much better than others exporting to China. The North American share of imports to China has fallen amid the US-China trade war. And while Europe’s – and in particular Germany’s – share has risen since 2007, Japan, South Korea, and Taiwan have fallen amid sluggish processing trade. ASEAN’s has also risen, with Vietnam’s share having surged.
Big shifts are underway in Russia-China trade
Data for Q3 on the volume of China's imports of crude from Russia show a drop against the June level. Rather than an indication that China's demand has peaked, this may be a sign that China is preparing for the Russian oil price cap recently agreed by G7 by shifting some of its purchases to the grey market.Find Out More
Levelling up is unlikely under the Liz Truss government
The government's levelling up ambition has probably been made more, not less, difficult by the new "Plan for Growth". Policies of lower taxes, less regulation, and a smaller state are unlikely to have much beneficial impact on long-term growth at the national level, let alone in those regions with long track records of underperformance.Find Out More