Loss of market shares on global trade and rating downgrading: what is happening to China?

2016 was the first year, in over twenty five years, in which Chinese exports lost market shares on international manufacturing trade. A few months later, the Chinese rating was revised downwards by Moody’s, again a unique event in the last quarter century. Are the two events connected?

The intense drop in market shares (nearly one percentage point) did not affect the Chinese leadership across global exporters, but it is certainly indicative of the many ongoing changes in global trade and industrial relationships and in the economic development model of China.

In its historical uniqueness, the decline in Chinese market shares appears to be linked to a phase of transition and transformation of the Global Value Chains in Asia. Especially in the Fashion and Electronics sectors, in which the network of Asian internal trade has significant proportions in the entire world trade.

A transformation which may have been burdened by the increasing cost of Chinese labour, that has eroded its competitive advantages, adding to the fears related to the poor dynamic of the domestic demand, fears for a possible lower supply capacity.

Such elements should be taken into account over the next years, so as to monitor new commercial and investment opportunities for those Italian enterprises that are best integrated in the global markets, especially the Chinese and Asian ones.