Mumbai: Since the General Agreement on Tariffs and Trade (Gatt) came into being in 1948, which eventually paved way for the WTO in January 1995, the share of China’s exports soared to 14.2% in 2015 from a paltry 0.9% 67 years ago, while that of the US nosedived to 9.2% from 21.6%.
In absolute terms, China’s export earnings zoomed to USD 2.27 trillion in 2015 from a non-consequential USD 530 million 67 years ago, says India Ratings in a report, quoting the World Trade Organisation (WTO) numbers.
The report by its analyst Abhash Sharma, however, does not offer the comparative numbers for the US or any other country.
India, too, slipped in the global trade sweepstakes. From a 2.2% share in the global trade in 1948, it’s down to 1.7% in 2015 and has always been under 1% in between. India’s third best figure was 1.3% in 1963.
Similarly, China’s exports to the country rose manifold to USD 62 billion in 2016 from USD 7 billion in 2005.
In fact, the US never saw its export share increase from 1948 as it has been steadily falling. Its second best peak was in 1963 when it had an export share of 14.6%.
Similar sorry story was that of Britain, whose share of global trade fell like ninepins – from a robust 11.3% in 1948 to just 2.9% in 2015.
These numbers assume importance as the Communist China — which has become the world’s factory over the past three decades — has completed 15 years as a WTO member on December 10 and is set to get the market economy status (MES) as per the trade body’s membership rules.
The only three other countries that have improved their exports share are Germany, Japan and the Netherlands, the report said.
While the share of Germany jumped from 1.4% in 1948 to 8.3% in 2015, that of Japan, which was the second largest economy till 2011, improved to 3.9% from 0.4% during this time while its peak of 9.8% was in 1993 and 6.8% in 2003.
Similarly, the Netherlands’ share rose from 2% to 3.5% during this period. Germany had a peak share of 11.7% in 1973.
Sharma, in the report, warned that an MES status for Beijing, which currently has only a non-market economy status, will be highly detrimental to the commodity driven economies and sectors.
Region-wise, Europe and Asia saw a rise in their share, whereas North America, South & Central America and Africa lost out massively.
While the share of Europe rose to 37.3% in 2015 from 35.1% in 1948, that of Asia had the maximum jump – from 14% to 34.2% in 2015.
Within Asia, share of the Middle East more than doubled – from 2 per cent in 1948 to 5.3% – thanks to the oil.
As against this, the share of North America nearly halved to 14.4% in 2015 from 28.1% 67 years ago, while that of South & Central America dipped to a third — from 11.3% to 3.4%.
Similarly, the trade share of Africa came crashing down from 7.3% to 2.4%.
Sharma warns that China getting the MES status would be a big risk to commodity-driven markets and sectors like iron & steel, chemicals, ceramics and tyres, the items which enjoy heavy state subsidy in the Communist nation. He notes these sectors are among those which have benefited by the anti-dumping duties in the past.
As a subsidy-driven manufacturing helped China yank everybody’s trade, it had to face the maximum number of anti-dumping duty cases.
According to Sharma, as much as 35% of the entire anti-dumping cases are against Beijing, with 541 of the 1,009 such matters being filed against the Middle Kingdom as of 2015.
New Delhi alone has the maximum number of unfair trade practises cases against Beijing, accounting for 35% of the total cases. As per the rules governing China’s accession to the WTO, the Communist giant would get the market economy status on completion of 15 years of membership.
Since December 10, 2001, when Beijing became a WTO member, China has been treated as a non-market economy based on terms of its membership of the trade body.
As per the report, the MES status means that China’s cost of production and sale price (within China) need to be considered by importing countries, while ascertaining if the dumping of goods is taking place, which was optional hitherto.
Though the MES status should be automatic as per the membership rule, it is easier said than done as even though not providing MES is not an option for WTO members. Many countries argue that MES should not be given to the world’s second largest economy.
The MES status would give Beijing’s competitors less opportunity to initiate anti-dumping measures on Chinese exports, thus pushing up exports from that country further and threatening commodity-linked sectors.