BEIJING — The Chinese economy hit an all time high trade surplus at a record $382 billion. Experts on China’s economy say this is due, in part, to the rapid foreign investment that has been pouring into China for the last several years.
Since 2013, the surplus has increased by 47.2 percent. However, the economies of other large nations have not been able to support the growth of the Chinese economy.
Trade is China’s most important factor that supports their economy. Low cost, manufactured goods bolster their economy and act as a catalyst for growth on a massive scale. Despite China’s strength in trade, other parts of China’s economy are weak and inefficient.
As the U.S. economy begins to revive itself, there is a stronger sense that the Chinese economy will gain more traction. This is because the U.S. is China’s most prominent export and the EU is China’s number one trading partner. However, Chinese economist, Li Miaoxian, notes, “China’s exports will be enough to provide support for overall growth, but won’t be strong enough to spark a rebound.”
The is indicative of the fragility of the Chinese economy. The world’s economies are highly dependent on one another because of the high degree of integration between the markets.
Royal Bank of Scotland Group Plc’s chief economist Louis Kuijs, says, “China’s export data for December possibly suggests some improvement in global import demand. Exports have continued to outpace global import demand through end 2014, pointing to further market share gains and suggesting that China’s overall export competitiveness remains intact.”
China remains competitive when other markets are strong and have a demand for cheap, manufactured goods. As the U.S. economy draws itself out of economic recovery, the Chinese export market grows substantially.
The weak economies of Japan and Europe negatively affected China because the demand for imports decreased. Even with stimulus packages from the central banking system and more to come, economists forecast that it will be difficult for China to shake decreased direct foreign investment and global economic recovery.
In the past, China has been exposed for endangering factory workers in deplorable and often dangerous working conditions. Recently, major Japanese retailer, Uniqlo discovered that their Chinese manufacturers mistreated workers. The Japanese retailer began outsourcing labor for the Uniqlo clothing line in the 1990s and their relationship has been free of controversy until now.
“Respecting human rights and ensuring appropriate working conditions for the workers of our production partners are top priorities for Fast Retailing,” said Yukihiro Nitta, Fast Retailing group executive.
Many of the factory workers have no choice but to submit to bullying and working excessive hours over an already tiresome 12-hour shift. The call to uphold Fast Retailing manufacturing laws came by Hong Kong NGO Students and Scholars Against Corporate Misbehaviour.
– Maxine Gordon
Sources: Bloomberg, Business Insider, South China Morning Post
Photo: Chris Rynning