LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

April 15, 2005 Friday
London Edition 2

SECTION: INTERNATIONAL ECONOMY; Pg. 9

LENGTH: 497 words

HEADLINE: China overtakes Japan as third largest exporter

BYLINE: By FRANCES WILLIAMS

DATELINE: GENEVA

BODY:


China has overtaken Japan as the world's third largest exporter, the World Trade Organisation said yesterday, after a surge in demand for its electronic goods led to a 35 per cent jump in overseas sales.

However, a slackening of the pace of investment by China and the US was likely to moderate economic activity and thus trade growth this year, the WTO said. Germany and the US remained the biggest exporters.

The WTO now expects growth of world trade in goods to slow to 6.5 per cent this year from 9 per cent in 2004, although this would still be above the average for the past decade.

Higher oil prices and interest rates would contribute to the slowdown, as would industry predictions of a "pronounced weakening" in the information and telecommunications equipment sectors. Double-digit increases in global shipments of mobile phones, digital cameras, semiconductors and personal computers gave a big boost to exports of several east Asian countries last year.

Electronic goods account for a third of Chinese exports and between one- third and two-thirds of exports from Singapore, Taiwan, South Korea, Malaysia and the Philippines.

The 35 per cent jump in the value of China's exports in 2004, which were up by a fifth in volume terms, was largely propelled by a 45 per cent surge in exports of electronic goods, according to Michael Finger, WTO senior economist. By contrast, shipments of textiles and clothing, which make up a sixth of Chinese exports, rose 15-17 per cent by value last year.

In dollar terms, world trade in goods rose 21 per cent in 2004 to Dollars 8,880bn (Euros 6,870bn, Pounds 4,683bn). This was the biggest increase in 25 years, reflecting both strong real growth and an 11 per cent rise in dollar prices owing to depreciation of the US currency.

China is now the biggest merchandise trader in Asia and the third largest in the world for both exports and imports, making it a key driver of world trade growth. Its insatiable appetite for fuel and other raw materials was one reason why high oil prices failed to depress the global economy last year, Mr Finger noted.

Demand from China also helped boost trade in other regions, especially Africa and South America, where Chinese investment in both natural resources and manufacturing has burgeoned in recent years. Africa's exports, helped by high oil prices, rose by more than 30 per cent in dollar terms last year, and exports from South and Central America showed a similar increase.

As a result, the value of exports by all developing countries rose by more than a quarter, bringing their share of world trade to 31 per cent, the highest since 1950.

China's role in underpinning world trade may become even more important this year if, as predicted, the falling dollar starts to restrain US import growth.

The US trade deficit, at Dollars 618bn in 2004, was equivalent to a record 6 per cent of US gross domestic product and 7 per cent of total world merchandise trade, the WTO said. Comment & Analysis, Page 19

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