Europe and China Read All About It?
Some read newspapers from the front and some (mainly sports fans) from the back. But none will be in any doubt as to today's major economic story, the financial crisis in the euro zone. However, somewhere in the middle, in the business pages, has been news of the recent decision of China's central bank to cut key interest rates for the first time since 2008, the latest in a series of measures taken by Beijing to sustain growth.
What's The Story?
These are two different storylines, but which should raise the most concern for the health of world seaborne trade? Is it the increased threat to imports to European consumers, or the risks to Chinese economic progress?
Two Billion Tonne Mark
World seaborne trade has generally held up well since the downturn in 2009 – 14% growth in 2010-11 combined. As the graph shows, Chinese seaborne trade passed 2 billion tonnes (bt) in 2011. That's an impressive 23% of world seaborne trade.
Last year Chinese exports grew by 5% to 0.4 bt and imports by 18% to 1.6 bt. However, Chinese exports in 2011 were below 2007 levels, despite an increase in container exports during the period, as China increasingly consumed domestically produced raw materials such as coal, exporting less. In contrast imports continued to expand, by 54% in 2008-11, driven by economic growth and supported by state stimulus in 2009.
Expansion in Chinese seaborne trade represented 21% of global growth in 2010, 54% in 2011, and is projected to account for 40% this year. In tonnage terms, imports to China have been the key driver.
Euro No Growth Zone
Meanwhile, European imports, currently under threat, haven’t provided much growth in recent years at all, with European consumers struggling. Container imports into Europe (see graph) totalled an estimated 189 million tonnes last year, just 11mt up on 2008. Total European imports (also shown on the graph, excluding minor bulks and non-cellular general cargo) made no contribution to expansion in global seaborne trade in 2011.
However, European imports are still expected to reach 1.4 bt this year, equal to 78% of the Chinese import total. Furthermore, in the long-run, demand patterns in Europe and other developed economies will impact on trade flows integrated with the parts of the Chinese economy focussing on exports to the west.
Front to Back or Back to Front
So European consumer imports contribute relatively little to world seaborne trade but in total European imports are significant in terms of existing tonnage trade flows. However, with Chinese imports the key factor driving seaborne trade growth, the continued health of the Chinese economy could be even more crucial. Of course it’s really a matter of degree but every story counts for something. Follow them all – every page of the newspaper might be important, even if you read the sports news first.