China: Changing shape of manufacturing sector contributing to global trade tensions - NAB

According to Gerard Burg, Senior Economist at NAB, much of China’s economic emergence over the past two decades has been driven by the development of its industrial sector and the sheer scale of this growth has fundamentally changed international markets as its high tech manufacturing ambitions are part of the growing global trade tensions and could breach WTO rules.

Key Quotes

“Changes in the overall share of China’s manufacturing over the past decade were subtle but evident in a number of key sectors. There were considerable increases in the share of manufacturing for transport equipment, along with non-metallic minerals, pharmaceutical products, computers & communications equipment and electrical machinery and equipment. It is notable that these sectors (with the exception of non-metallic minerals) are higher value added industries.”

“This compositional change is expected to continue over the next decade. The State Council’s Made in China 2025 plan aims to drive the country further up the manufacturing value chain, with growth in areas such as robotics, biotechnology, aviation, new energy and autonomous vehicles and advanced information technology (such as artificial intelligence). That said, these plans have contributed to the trade tensions between the United States and China.”

“The recent Section 301 report from the US Trade Representative cited the Made in China 2025 plan one hundred and sixteen times – accusing Chinese authorities of forcing technological transfer and Chinese corporates of intellectual property theft from advanced economy firms, as well as providing unfair industry policies to support domestic firms. The removal of the latter was reported as a key demand from US negotiators in recent trade talks.”

“A key part of the Made in China plan is a 70% self-sufficiency target for components and basic materials in a range of high technology sectors – with the possibility of quotas to meet these targets. Such quotas would be in breach of China’s WTO requirements and would be a major concern for major high tech exporters such as Japan, South Korea and Germany.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD retreats below 1.1300 area as NFP-inspired dollar weakness fades

EUR/USD jumped to a daily high of 1.1333 with the initial market reaction to the disappointing November Nonfarm Payrolls data but quickly returned below 1.1300. Rising US Treasury bond yields seem to be helping the dollar stay resilient against its major rivals. 


GBP/USDdrops to 1.3250 area as dollar regains strength

GBP/USD spiked above 1.3300 in the early American session with the initial market reaction to the gloomy US November jobs report. However, the greenback regathered strength on hawkish Fed commentary and forced the pair to turn south.


Gold struggles to capitalize on weak NFP data, holds near $1,770

Gold spiked to a daily high near $1,780 with the initial market reaction to the disappointing Nonfarm Payrolls data from the US but seems to be having a difficult time preserving its bullish momentum with the 10-year US T-bond yield staying resilient.

Gold News

The bull and the bear case for BTC

Bitcoin price saw a bullish impulse that faced massive headwinds before it tagged a crucial psychological barrier. Bitcoin is likely to experience massive volatility as the situation resolves over time. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!