Lastly, beyond the positive trade impulse in the short-term, the structural slowdown and rebalancing of the Chinese economy is expected to trigger a cumulative loss of exports of up to USD24bn by 2030 for the ten countries in our sample
. Being the first economy in and out of the slump, China is leading the global recovery out of the Covid-19 crisis in 2020. The strong rebound of the Chinese economy since Q2 2020 has mostly been driven by surprisingly resilient exports (see here
for more details), together with robust activity in the construction and infrastructure sectors. Obviously the latter sectors are also good news for China’s trade partners, mainly for commodity exporters.
However, in the long run, the Chinese economy is on a path towards a structural slowdown under the impact of a declining labor supply and capital accumulation, as well as slowing productivity gains. We estimate that China’s GDP growth could average between +3.8% and +4.9% over the coming decade (after +7.6% in the 2010s), depending on the success of structural reforms in lifting potential growth (see here for more details). Furthermore, increasing protectionist rhetoric across the globe, along with the dual circulation strategy launched this year, are likely to transform the country’s foreign trade. In particular, China’s trade strategy seems to prioritize maintaining export market shares while reducing reliance on imports.
Taking into account these structural changes, we can quantify the amount of Chinese domestic demand that will be ‘lost’ compared to a situation with growth similar to the 2010s for countries exporting to China. We find that in value terms, Brazil, Angola and South Africa would incur the largest cumulative loss of exports by 2030, amounting to up to USD14bn, USD5bn and USD2bn, respectively
(see Figure 4). In relative terms, Angola, Zambia and Ghana would be the most hit, with the cumulative loss of exports by 2030 amounting to up to 5.8%, 1.4% and 0.9% of their respective GDPs.
Figure 4 – Cumulative loss of exports by 2030 caused by Chinese structural changes (slowdown and rebalancing)