As the export share rises, China's export destinations have become more diversified, with new drivers of exports maintaining rapid growth and the quality and technology of exports continuously improving. Moreover, the acceleration of Chinese enterprises "going global" has further enhanced the competitiveness and resilience of China's export chain.
Liao Zongkui / Text
Currently, China's economy is in a period of post-pandemic economic recovery and economic momentum transformation. The export chain not only provides good support for economic growth but also contains an increase in the technological content of exports, which is an indispensable part of high-quality economic development.
The latest data released by the General Administration of Customs show that from January to August, the total value of China's import and export of goods increased by 6% year-on-year. Among them, exports increased by 6.9% year-on-year, achieving a trade surplus of about 4.33 trillion yuan, a year-on-year increase of 13.6%. Since 2024, foreign trade has continued to maintain a good growth trend.
Exports to ASEAN, the European Union, and the United States have all increased to varying degrees. In the first eight months, ASEAN was China's largest trading partner, with a total trade value of 4.5 trillion yuan, an increase of 10%, accounting for 15.7% of China's total foreign trade value. Among them, exports to ASEAN were 2.69 trillion yuan, an increase of 13.1%. The European Union was China's second-largest trading partner, with a total trade value of 3.72 trillion yuan, an increase of 1.1%, accounting for 13% of China's total foreign trade value. Among them, exports to the European Union were 2.44 trillion yuan, an increase of 2.9%. The United States was China's third-largest trading partner, with a total trade value of 3.15 trillion yuan, an increase of 4.4%, accounting for 11% of China's total foreign trade value. Among them, exports to the United States were 2.38 trillion yuan, an increase of 5%.
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Exports continue to perform well, on the one hand, thanks to the restocking of Europe and America driving the recovery of external demand, which has formed a certain pull on China's exports; on the other hand, the quality of China's product exports is continuously improving, export destinations are more diversified, and enterprises are accelerating their "going global," which further enhances the competitiveness and resilience of China's export chain.
Evolution of Export Competitiveness
After China joined the WTO, with the ups and downs of the global economic cycle, it roughly experienced three long cycles of exports. However, the structure of exports is constantly changing, and the competitiveness of exports is continuously improving:
From the regional perspective of exports, the proportion of exports to emerging market countries such as ASEAN, Central Asia, Africa, and Latin America is continuously increasing, while the proportion of exports to the United States is continuously decreasing. In 2023, ASEAN surpassed the United States and the European Union for the first time to become China's largest export market, and the concentration of China's exports has decreased.
From the perspective of exported goods, the export of emerging business forms is booming, and the export of the "new three" continues to maintain high growth. In 2023, the combined export of "new three" products such as electric vehicles, lithium batteries, and solar cells was 1.06 trillion yuan, an increase of nearly 30%. The import and export of cross-border e-commerce increased by 15.6%, with exports increasing by 19.6%.The new momentum of China's exports is primarily focused on high-tech and new energy sectors, such as photovoltaics (PV), lithium batteries, and new energy vehicles (NEVs). Electronic products, particularly PV products and lithium batteries, have become significant drivers of export growth due to their technological innovation and environmental advantages. PV products, with their clean energy characteristics, are increasingly in demand worldwide, while lithium batteries are favored for their applications in energy storage and NEVs. In the automotive sector, the rise of NEVs has injected new vitality into the export market.
Taking automobiles as an example, China's automobile exports to Latin America, Southeast Asia, and Africa have been continuously growing. The market share in these regions is close to 20%, with a continuous increase in the dependency of these countries on imports from China. China has mainly replaced some of Japan's share in Southeast Asia, while in Africa and Latin America, it has primarily replaced the European Union's share, with some of the United States' share as well. Relying on cost-performance advantages in emerging markets, China has successfully taken market share from established automotive powerhouses in Asia, Africa, and Latin America amidst fierce competition.
Changjiang Securities believes that China's early strategic layout in emerging fields and its grip on key supply chain segments are significant reasons for the competitive edge of the new export momentum. As concerns about global warming deepen, the need for environmental protection and the transition to clean energy in various countries has become increasingly urgent. Many have set carbon neutrality targets and increased efforts to reduce carbon emissions. NEVs, as a low-carbon, zero-emission mode of transportation, are widely seen as one of the key ways to address climate change and achieve a low-carbon economic transition.
As the world's largest emitter of greenhouse gases, China has taken the lead in transitioning to NEVs, achieving rapid development in electric vehicles. By 2023, China's electric vehicle sales accounted for nearly 40% of all vehicle sales, with a market penetration rate significantly ahead of other countries. Building on the foundation of a vast market scale, China's new energy industry chain has also achieved remarkable results overall, with a complete supply chain system, particularly strong dominance in material processing, component production in the midstream, and battery and vehicle production in the downstream. This has successfully shaped new advantages and momentum for the development of China's automotive industry.
Overall, China's electric vehicles lead the global market in both production and sales, accounting for over 50%. A decade ago, China was still a major importer of automobiles, and the share of domestic brands in China's domestic sales was less than half. However, with the strong drive of NEVs, the market share of China's independently produced automobiles has exceeded 60%, with a significant reduction in import dependency and a strong lead in exports.
Characteristics of Going Global
Export and going global are two strategies that can both increase a company's revenue share, but they have different impacts on corporate financial statements.
Kaiyuan Securities believes that export activities primarily affect a company's profit and loss statement by increasing overseas sales. Specifically, the growth in export revenue is directly reflected in the company's revenue section, which can quickly increase the company's net profit. Especially in the current macro environment where external demand is stronger than internal demand, exports have become an important force in driving corporate revenue growth. Industries with high export dependency, such as home appliances, electronics, and automobiles, directly increase their net profit in the profit and loss statement by increasing overseas sales, but their impact on the balance sheet is relatively limited.
Unlike exports, going global not only affects a company's profit and loss statement but also has a significant impact on the balance sheet. Going global usually involves companies allocating assets and investing overseas, which not only increases the proportion of overseas revenue but also leads to the growth of overseas assets, thereby affecting shareholders' equity. In the long term, going global can bring more stable and diversified sources of income for companies, especially when dealing with fluctuations in domestic market demand. This diversified revenue structure helps to smooth out the overall profit fluctuations of the company. Industries with high dependency on going global, such as non-ferrous metals and minor metals, enhance their competitiveness in the international market by increasing overseas asset allocation and also affect the performance of ROE. As the export chain differentiates, the importance of going global will increasingly be valued by the market.
In 2022, non-financial foreign direct investment increased by 11.4% year-on-year. By region, ASEAN and Latin America are China's largest foreign investment regions, accounting for 28% and 25% of ODI, respectively. Since 2018, in the distribution of Chinese enterprises' overseas investments, investment in Europe and America has shown a contracting trend, while investment in Southeast Asia and Latin America has steadily increased. Investment in the Middle East has significantly accelerated after 2022.Open-source securities further analyzed and pointed out that compared with exports, the behavior of going abroad focuses more on long-term asset allocation and market layout to correspond with the company's global development strategy. Going abroad can not only expand the digestion of external demand but also help to resolve the increasingly serious trade barriers and tariff issues. By utilizing the resource and labor cost advantages of the destination countries, it can continuously optimize ROE in the long term and ensure a competitive edge in the complex international environment.