China has witnessed significant growth in its export value and sophistication, particularly in sectors such as electronics and machinery. Despite fluctuations in exchange rates, the impact on China’s exports has been relatively limited.
China’s export value has skyrocketed from US$224 billion in 1995 to an impressive US$3.7 trillion in 2021. During this period, there has been a decline in the share of textiles exports from 30% to 13%, while electronics and machinery have seen an increase to 26% and 19%, respectively. Notably, China’s ability to produce sophisticated products, including vaccines and serums, has further showcased its expertise, with exports in this sector surging from less than US$1 billion in 2019 to over US$25 billion in 2021.
Research suggests that an increase in product sophistication reduces the vulnerability of exports to exchange rate fluctuations. China’s entry into the World Trade Organization in 2001 led to a surge in foreign direct investment and a rise in its Competitive Complexity Index (CCI). This, coupled with advancements in technology and an abundant workforce, contributed to China’s resilience to exchange rate impacts on exports. While exchange rate flexibility has had varying effects on exports at different time periods, China’s evolving export basket, which has become more sophisticated over time, has reduced its reliance on exchange rate changes for export success.
Looking ahead, the depreciation of the Chinese yuan and China’s focus on industry upgrading through trade and industrial policies raise questions about the responsiveness of more sophisticated exports to factors like tariff increases and trade wars. Although China aims to insulate itself from exchange rate shocks, the impact of tariff hikes on high-tech manufacturing remains an area for future investigation.
In terms of China’s exports to Thailand, key sectors include electronic components, machinery, and chemicals. Bilateral trade between the two countries reached a substantial $114 billion in 2021, with China’s exports to Thailand worth $61.4 billion, resulting in a $8.8 billion trade surplus in favor of China. The top five Chinese exports to Thailand in 2021 were electronic components, machinery, chemicals, plastics, and textiles, accounting for over half of China’s total exports to Thailand.
China’s exports to Thailand are predicted to continue growing due to Thailand’s robust economic growth and increasing demand for Chinese goods.
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