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China Will Continue to Be a Major Contributor to Global Trade Growth in 2022


China Will Continue to Be a Major Contributor to Global Trade Growth in 2022

Despite the twin impacts of the pandemic and the US-China trade war, economic indicators suggest that China will continue to grow rapidly through the next year and will be one of the biggest contributors to global trade growth in 2022. 

Indeed, in some ways, the current trajectory of China’s economic growth and trade surplus – both highly positive – is a return to normal. Though many feared that the pandemic and the US trade war would cause long-term, structural damage to China’s trading and economic infrastructure, it appears that this was not the case. In fact, changes to the way supply chains work may mean that China is now in a stronger position than it was at the beginning of the pandemic – a luxury that other countries can only dream of.

In this article, we’ll look at the most recent economic indications from China, explain what they mean for global trade, and see how analysts and governments in the West are responding to these signs.

Positive indications

First, let’s look at the state of the Chinese economy. Here, the news is very positive. On almost any measure that is commonly used as a proxy for consumer demand – the Purchasing Managers’ Indexes (PMI), electricity consumption, bank lending, etc. – the Chinese economy is booming. 

Though many analysts expected that consumer demand would be significantly down in 2021, in actuality, China is experiencing strong demand in both domestic and foreign markets. The Chinese government continues to invest heavily in making China a tech superpower, and so far, they are mostly succeeding. 

There are some complexities hidden behind this headline, though. One is that China has seen heavy food price inflation over the past few months driven, in part, by the US-China trade war. For many households in the country, food makes up a sizable proportion of the household budget. 

On the other hand, it seems that the pandemic has not affected the Chinese economy to anywhere near the degree that some experts expected. The transition to remote working for office workers, for instance, went more smoothly than had been predicted and occurred without a net loss to the economy. This was the case in some other countries too – remote workers contributed $1.2 trillion to the US economy alone last year, a 22% increase from 2019 – but it was especially pronounced in China.


Increased foreign trade

Since both domestic and foreign demand for Chinese goods remains high, we are likely to see China’s share of global trade increase over the next year. This is also a continuation of the pre-pandemic trend, which saw gradually increasing volumes of high-value finished goods being exported from China.

When it comes to global trade volumes, the picture is not completely positive, however. Though demand for Chinese goods remains high, the pandemic has imposed new restrictions and complexities on exporters. This is likely to slightly reduce trading volumes over the next year. That said, China is already a titan when it comes to global trade, and a slight reduction in growth is not likely to affect that. 

Liang Ming of the Chinese Academy of International Trade and Economic Cooperation predicted that the country’s total foreign trade will be near five and a half trillion by the end of 2021. In fact, since that prediction was made, market conditions have only grown more positive for Chinese exporters. 

Many manufacturers in the country have used enforced lockdown periods to update and improve their logistics and supply chains for the post-Covid world, and many of their trading partners have come out of the pandemic more quickly than expected. 

Calls for decoupling

All this is great news for China, and specifically for Chinese exporters. It might not be such good news, however, for the countries that buy goods from China. This includes the US and the majority of European nations, all of whom are heavy consumers of Chinese-made goods. Many analysts are alarmed at the growing dominance of China in global trade, pointing out that this could be dangerous for the world’s privacy and safety.

The numbers are certainly impressive. Official data released from the Chinese government in July 2021 showed that for the first half of the year the country’s foreign trade surged to 18.07 trillion yuan, equal to roughly $2.79 trillion USD. This was despite many industries being affected by the US trade war and despite calls in the US for the country to transition away from its dependence on China.

There are other concerns about granting China a larger portion of the global economy. Specifically, concerns about the privacy of data collected by Chinese companies remain high, as do concerns that Chinese banks are being used to launder money on behalf of Mexican and Colombian drug cartels.

All of these concerns have led some think tanks to call for a “decoupling” from the Chinese economy. This would involve selected trade embargos in order to promote domestic production of consumer items in Western economies and to give these economies time to make back some of the gap that is opening in global trade.


Ultimately, the trajectory that China now finds itself on – with a growing economy and a rapidly increasing trade surplus – has been the norm for much of the last two decades. And if a global pandemic and a US-directed trade war has been unable to stop the growth of the Chinese share of global trade, it’s unlikely that anything will. 

China market

Success in China: Market Opportunities & How to Get Started

Are you an ambitious entrepreneur from the west seeking to expand to China? Or are you interested in opening a new business in China? If yes, this article is for you. We will explain the 5 most viable business openings in China today and the 5 most reliable tips on how to get started in this highly-competitive market. Please be our guest.

Which Viable Market Opportunities Can You Pursue in China?

As the affluent middle class continues to expand in China, solid economic transformations in the country are being realized day by day. The biggest beneficiaries of these transformations are multinational companies who have set up or are planning to open a shop in China. There are now bigger and better market opportunities to pursue, more advanced industries to invest in, and more tech-intensive manufacturing opportunities to consider. As a matter of fact, China now boasts of a 50% bigger manufacturing economy as compared to the USA.

If you are looking to tap into the continued increase in high value-added production, increased globalization of the service sector, as well as the increased outbound investment in China, these 5 market opportunities would be lucrative enough for you:


Rising wealth often comes with an increase in lifestyle diseases. An increase in manufacturing, on the other hand, brings forth many environmental concerns. These two factors have made the healthcare industry very lucrative in China. You will create a reliable cash cow if you could invest in a business that deals with herbal supplements or small health products- or a mainstream pharmaceutical company, so to speak. Also, the use of skincare products is on the rise in China. It’s best to set up a wholly foreign-owned enterprise for such operations.

Import and export trade

China is currently the largest exporter of tech goods and importer of processed foods globally. That means you can build a profitable importing and exporting business here in a heartbeat. 

Supplementary education

Many middle-class Chinese are keen on improving their English and expanding their knowledge of different aspects of business and politics. If you can offer them after-school private tutoring services, you will be making impressive annual returns on a consistent basis. Moreover, online tutorage is on the rise in China, which enables you to tutor more people in a more cost-effective way.

Food production

This goes without saying: Everyone needs food, everyone loves good food. And now that the middle-class in China is welcoming new entrants in huge numbers, there is a significant supply gap within this class for as long as the food is concerned. A rise in class obviously comes with a change in lifestyle, and food is at the center of every lifestyle. 

Mobile phones and accessories

The whole world has in the recent past turned to China for all its tech needs. The nation is the largest producer and importer of affordable mobile phones and accessories, meaning that a business in this industry would be extremely profitable.

What kind of structure to choose when expanding to China

IF you are considering expanding your business to China, establishing the right business structure is crucial. There are several types of business structures:

-Representative Office – allows foreign companies to open their offices in China and hire staff under their own legal entity. However, the offices are not allowed to perform any business, rather it is done by the parent company which is abroad. 

-Sales Office- this business structure enables foreign businesses to rent an office with a Chinese address for conducting business, without the necessity to establish a separate legal entity. All the activities and costs incurred in this office, are paid by the parent company.

-Foreign Invested Partnership- For this business entity, there is no need for minimum capital requirements. Depending on agreements, two or more investors can be joined and form this type of structure. 

-Wholly Foreign-Owned Enterprise- Through a wholly foreign-owned enterprise, two or more foreign partners can come together and establish the company which has the same liability as domestic companies. Moreover, it provides the owner with autonomous control and ownership. 

How to Get Started In China

As lucrative as China could be, many investors from the west talk about it with fear. Some of these foreign entrants tried and failed, or struggled to find their footing in this Asian economic giant. But what would render you unable to compete and survive here? For starters, the business environment here is too unforgiving and the competition too stiff for the faint-hearted. Also, cases of language barriers, cultural differences, and bureaucratic government regulations have led to the peril of many. 

In the middle of all these, how do you defy the odds and succeed in China? Here are 5 actionable tips on how to get started in China:

Don’t just translate your content for China; ensure that everything about your business is localized for China. 

It is important to understand and comply with all business regulations in China. The hiring process can be tricky to a new entrant, which necessitates the services of a Chinese recruitment agency. Such an agency will help you with all employment laws, privileges, and remuneration. 

Ensure that you understand and respect the cultural differences that exist between the west and the east. 

Never underestimate the power of customer opinion in China. Let the customer tell what their experience with your product is, respect their opinion, learn from your mistakes, and ensure that you find lasting solutions to all their concerns. 

As much as possible, try to work with a local partner in order to benefit from the many favors local entrepreneurs get from the government.