Export Growth Advantage Index

Introduction

China has experienced unprecedented economic boom over the last 25 years and achieved a remarkable economic growth. Among its successes, impressive leaps have been taken in the field of export growth, from a once minor player in world trade to the largest exporter of goods and services in the world.

With the emergence of China as a major international player, the dynamics of its export sector have also seen a great transformation. It has been one of the main sources of economic growth for the country, and in the process it has managed to become the driving force of global economic growth.

This paper proposes to examine the export growth trajectory of China to understand its competitive advantage and factors that are driving its export growth. The paper will provide an overview of the export sector in China, its competitive strengths, and discuss the factors which could be influencing its advantage in exports.

Overview of the Export Sector of China

Chinas export sector has seen tremendous growth over the last few decades and is the enabler of its unprecedented economic success story. According to the World Banks Trade and Development Statistics, the countrys exports of goods and services experienced a three-fold increase between 2000 and 2017 (from US$ 441.7 billion to US$ 1.64 trillion). Currently, China accounts for 12.6% of the worlds exports in 2017, making it the largest exporter in the world.

In terms of its export product mix, 45% of its exports are manufactured items; while 11% are food items, 6% are raw materials, and 33% are services. In terms of the type of products exported, manufactured items such as computers, telecommunications equipment, and integrated circuits take up the largest share in Chinas exports (25%, 18%, and 11% respectively). In the services sector, the countrys dominant industry is tourism and education, which accounts for 20% and 10% of exports respectively.

Competitive Strengths of Chinas Export Sector

The performance of Chinas export sector can be attributed to its competitive strengths such as low labour and operational costs, government subsidies, and its unique production systems.

Low labour and operational costs

China currently has one of the lowest labour costs in the world, which has made it an attractive destination for multinationals. Labour costs in China are currently around 20% less than those in the US and 15% less than those in the EU.

This cost advantage is further amplified by the country’s subsidies, which support investment in infrastructure, wages, and technology. Additionally, the costs of shipping and production are usually cheaper than in other export destinations, allowing businesses to reduce their operational costs and increase their competitiveness.

Government subsidies

Chinas government provides direct subsidies to manufacturers and exporters, which help to reduce costs and increase exports. Additionally, tax incentives are also given to exporters, which help to offset production costs and improve margins.

Unique production systems

China has established a unique production system, which is made up of specialized production units that can produce large quantities of goods quickly and efficiently. This system has allowed China to become one of the most efficient and cost-effective producers in the world.

Innovative production methods, such as just-in-time production, reduce costs and improve efficiency. Furthermore, China has followed a policy of using foreign expertise to ensure the quality of output, which has also contributed to its export success.

Factors Influencing Chinas Export Growth

China’s export growth can be attributed to a number of factors, including its competitive advantages, liberal economic policies, and external demand.

Competitive Advantages

As discussed above, Chinas competitive edge is due to its low labour and operational costs, subsidies, and advanced production systems. These factors have enabled Chinese exporters to deliver cost-competitive exports and remain competitive in the global market.

Liberal Economic Policies

The governments liberal economic policies have helped to create an environment conducive to export growth. These policies include allowing private companies to operate freely in the export sector, removing the previous government monopoly, and encouraging the development of export-oriented industries.

External Demand

External demand is an important factor driving Chinas export growth. There has been a steady increase in global demand for Chinese exports, particularly in the Asia-Pacific and North American regions.

Conclusion

Chinas impressive performance in export growth has been remarkable. This has largely been due to its competitive advantages such as low labour and operational costs, subsidies, and advanced production systems. Additionally, the countrys liberal economic policies and increased external demand have also contributed to its export growth. It is expected that China will continue to remain a major player in world trade in the years to come.

Export Growth Advantage Index

The Export Growth Advantage Index (EGAI) is a new index to measure the competitiveness of countries export performance. It looks at the relative growth in exports between countries over a period of time and focuses on the specific conditions and factors that give a certain country’s export sector a competitive advantage.

The EGAI looks at several indicators to determine a country’s export competitiveness. First, it looks at the composition of the country’s export goods. This includes the types of goods a country exports and how they compare to the goods of other countries. This information gives an indication of how well the country’s goods are being received around the world and if the goods are being seen as competitive.

Second, the EGAI looks at the trade costs of the country. Costs such as taxes and transportation are applicable to any country’s exports and they can have a major impact on its export competitiveness. The EGAI looks at how countries’ trade costs compare to those of other countries and thus helps to identify those economic policies and regulations that impact the trade costs and competitiveness of countries.

In addition to looking at composition and trade costs, the EGAI also takes into account the specific conditions of the countries’ export markets. For example, a country with an effective transportation network or a country with access to resources such as oil and minerals or with political stability may have an advantage in terms of exports. The EGAI takes these factors into consideration and provides a comprehensive view of a country’s export performance.

The EGAI is an important tool for countries to assess their export competitiveness and identify areas in which they can improve. By looking at a country’s specific trade conditions, the EGAI can help to identify where policy makers can work to make the export sector more competitive. This information can help countries to make informed decisions on how best to grow and maintain their export performance.