While China touts its so-called new drivers of growth, the reality is that ‘cheap China’ is back.
Exports of electric cars, batteries, and laptops are overshadowed by the surge in affordable products shipped abroad directly via platforms like AliExpress, Temu, Shein, TikTok, and others.
These affordable items, shipped directly to consumers, have already become China’s second-largest individual export category, surpassed only by cellphones.
The category is close to reaching the $100 billion mark, with nearly 20% of that amount projected to be shipped to the European Union. It is outpacing exports of other notable categories, such as laptops, Li-ion batteries, electric cars, and photovoltaic panels.
However, expenditures on China’s imports from Russian consumers are 80% lower per capita than those of their EU counterparts.
For example, in April 2023, U.S. Customs and Border Protection (CBP) Trade Enforcement Team at the Port Everglades seaport in Fort Lauderdale, Florida, discovered a disassembled helicopter that arrived in 21 crates inside a 40-foot sea container. The helicopter was shipped as de minimis and manifested with the vague misclassified description, ‘personal effects.’
Credit pic U.S Customs and Border Protection
While TikTok Shop is set to launch its platform in Spain this month as part of its strategy to expand globally, TEMU alone lands 400,000 packages per day in Germany. The European Commission considers punitive actions to curb the explosive market growth of Chinese merchants.
Under the slogan “Small parcels drive big markets,” the Chinese government has launched hundreds of initiatives to bolster this export channel. These measures include providing financial incentives, streamlining customs procedures, and establishing thousands of overseas warehouses. With plans to interconnect these facilities in the future, it appears to be laying the groundwork for what could become a state-backed version of Amazon.
MERICS’ Europe China 360° newsletter explores the issue with sharp policy analysis from Senior Economist François Chimits, supported by data from SOAPBOX.
Kaja Kallas, as of November 28 the High Representative of the EU for Foreign Affairs, stands out with her bold assertion during a parliamentary address:
“If we do not sign the deal, China will”
This divergence in trends highlights the asymmetry in the trade relationship, leading to an imminent need for strategic adjustments
Except for a blip after the lifting of COVID measures, China’s PMI Employment Subindex has been in the contraction zone for two years
The recent success of a Danish company with drugs based on the active principle semaglutide has indeed been extraordinary. The soaring demand has propelled the company into a dominant position.
Denmark’s exports of semaglutide reached €1.5 billion in the first ten months of 2024. However, when Denmark exports the active ingredient, it does so under the destination code QZ. This code, fully legitimate under EU regulations, allows the destination of the shipment to remain undisclosed. It serves to keep the destination confidential for various reasons, while ensuring consistency in total trade statistics.
According to China’s Customs data, it is evident that China is absorbing nearly 100% of Denmark’s semaglutide exports. Unlike Denmark, China does not conceal the origin of these shipments. However, it remains unclear whether the semaglutide is intended for China’s internal market, processing trade, or re-exportation, as the active ingredient is imported under an entrepôt trade regime.
China reports $1.7 billion in imports of semaglutide from Denmark. Nine domestic companies have received approval this year alone for clinical trials of semaglutide biosimilars targeting weight management
By 2024, EU exports to Hong Kong are projected to be 15% below their 2017 peak. The figures show no correlation whatsoever between EU exports to Hong Kong and the Chinese mainland’s imports from Hong Kong.
Data Jan-Oct 2024. Source China Customs
To avoid container shortages caused by the ongoing Red Sea crisis, port strikes, and other disruptions, there is a growing push to produce more containers to meet rising demand.
China is the world leader in container production, responsible for over 60% of all new containers globally.
SAIC Motor and Volkswagen signed a deal on Nov 26 to extend their joint venture to 2040.
“We are accelerating the transformation of SAIC Volkswagen along our ‘In China for China’ strategy on all levels” – said VW.
Tailoring a global portfolio specifically for a single country is uncommon but not unheard of. An example is Shell, which has adapted its offerings through a joint venture with Brazil’s Raízen. In this partnership, Shell holds a minority stake, while Raízen operates the venture in a country where most vehicles rely on a blend of ethanol and gasoline. Initially focused on Brazil’s domestic market, the Shell-Raízen joint venture later expanded to include exports.