Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 27
Foreign Trade
ОглавлениеWhat has been the pattern of foreign trade in these countries? We have already seen that in terms of current account balance, China and Russia are the surplus countries while India, Brazil, and South Africa are deficit ones. Thus, there is a differing degree of openness among these countries. Illustratively, while the rank of China in terms of merchandise exports is first, the closest next Russia is at seventh (Table 5).
As a group, while BRICS account for roughly one-fifth of global exports, its share in global imports is about 15%. But China alone accounts for nearly 14% of global exports and 10% of global imports. This disproportionately higher share of China in global trade has its implications. Who are the major trading partners of BRICS? More importantly, among the BRICS countries while China appears to be among the top five export destinations for all the BRICS countries no other BRIC countries are in the top five export destination, implying that trade relations among the BRICS countries is hugely dominated by China (Table 6). Interestingly, China also dominates for all the countries’ import destination as well (including China, because of round tripping from Hong Kong). This dominance of China in trade relations almost makes the BRICS group as a sub-loop where all the four countries are in one group and China in another. In fact, there are adverse implications of this supremacy of China even within the BRICS block. Illustratively, there are reports of India banning select items of Chinese imports and Chinese officials terming such acts as reflective of Indian jingoism (Hindustan Times, 2016).
Table 5:Trade profile of BRICS economies.
Source: World Trade Organisation, available at http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx.
But why does the trade performance differ so much across the BRICS nations? What are the drivers of export growth? Econometric analysis of growth drivers across emerging market economies tends to focus on the following variables: (i) real effective exchange rate change; (ii) growth of real non-oil goods import demand of trading partners; (iii) change in most favored nations’ (MFN) tariff rates; (iv) inflow of foreign direct investment (FDI); (v) change in export diversification; (vi) change in manufacturing export quality; (vii) number of documents required for export; and (viii) change in good market efficiency score (IMF, 2017). In terms of export diversification, while China, India, and South Africa are fairly diversified, expectedly, exports of Russia and Brazil are far more concentrated.
In terms of the determinants mentioned above, the situation in China seems to be grossly distinct from its other BRICS partners. In fact, Chinese trade is comparable to other advanced countries — its share in global exports is higher than countries like the US, Japan, France, and Germany. Mathai et al. (2016) have noted:
“China has become the world’s largest trading nation and the center of the global supply chain. A negligible player in global trade just a few decades ago, China now accounts for more than 12 percent of world exports and 10 per cent of world imports, more than any other single country. Nominal exports grew by 17 per cent on average each year from 1990 to 2012, receiving a particular boost after China’s accession to the World Trade Organization in 2001. … China is now the world’s largest importer of intermediate goods and the anchor of the global supply chain trade. The number of China’s major trading partners rose several-fold over the same period …, and as trade grew, so also did foreign direct investment, of which China is now the world’s largest recipient (as well as an increasingly important source)” (Mathai et al., 2016: 6).
Table 6:Major trading partners of BRICS.
Notes: *China’s imports from China can be explained by the reimport activity. It is related to processing trade. More than 90% of China’s imports from China are produced in China, exported to Hong Kong, and then reimported to China. 73% of products reimported are used as inward processing materials and 70% are imported by the province of Guangdong, due to the geographic and logistic convenience of Guangdong with Hong Kong. Goods entering for processing trade are exempted from import duties. The business management of multinational enterprises and their distribution centres are often based in Hong Kong.
Source: Exim Bank (2016).