Tuesday

26th May 2020

China set to overtake Germany as world's largest exporter

  • German exporters have suffered from a shortage or trade finance (Photo: EUobserver)

A World Trade Organisation report published on Wednesday (22 July) repeats an earlier forecast of a 10 percent fall in world trade levels this year.

At the same time, the quicker economic recovery expected in Asia is likely to see China overtake Germany as the world's largest exporter.

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Discussing the new report in Singapore, the organisation's chief economist, Patrick Low, told journalists the two countries were likely to switch their positions at the top of the global trade league table as early as this year.

China has been gaining ground on Germany, with the Asian giant's merchandise exports valued at €1,004 billion in 2008, just behind those of Germany on €1032 billion.

Selen Guerin, head of trade policy with Brussels-based think-tank the Centre for European Policy Studies, told EUobserver that German exporters had been badly hit by a shortage of trade finance while demand for Chinese exports had largely held up.

"The origin of the economic downturn is a financial crisis, so it hit developed countries more than developing countries. Banks stopped all forms of credit, including trade finance," she said.

European and Asian growth figures have also shown signs of divergence.

The EU's economy as a whole is set to contract by 4 percent of GDP this year according to data from the EU's statistics office, with Germany set to suffer a larger 5.4 percent contraction.

China, on the other hand, turned in positive year-on year growth of 8 percent in the second quarter of this year and appears well placed to benefit from a global upturn.

WTO trade report

Presenting the new trade report in Singapore, the WTO's director-general Pascal Lamy said Asia was likely to lead the world's trade recovery out of its current decline.

The 10 percent fall predicted for this year is the worst since World War II.

The report focuses on trade measures used by different countries around the globe to protect vital economic sectors, warning that although these can be politically useful in the short-term, they need to be rolled back to avoid long-term harm.

"Protecting trade can be tempting until everybody understands that protectionism does not protect," said Mr Lamy.

Faced with economic difficulty, WTO agreements allow governments to implement a range of measures such as antidumping and tariff increases up to permitted levels.

China urges Germany and France to solve euro-crisis

Chinese Prime Minister Wen Jiabao on Thursday offered vague promises to buy bonds from troubled euro-countries, but said that it is ultimately up to Germany and France to solve the crisis.

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