Industry and Trade in Asia

Running head: INDUSTRY AND TRADE IN ASIA
Industry and Trade in Asia
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INDUSTRY AND TRADE IN ASIA1
Introduction
Over the last few decades, rapid growth rate of China has made the nation one important
player in the global economy. With the rapid expansion of China’s economy since the last three
decades share of China in world’s GDP has increased significantly. China’s share in world’s
GDP increased sharply from 5% to 25% between 2005 and 2015. China is one main export
market for many developed and developing nations in the world (Cashin, Mohaddes and Raissi
2017) Integration of different nations with China makes China the one major driver of world
economic growth. For Australia, China accounts 35% of total export, for South Korea the export
share of China is 25% and that for Japan the share is 20%. China in recent years however is
undergoing a structural transformation that has hampered steady growth pace of the economy.
The economic growth rate in China in 2019 was only 6.1 percent. The dependency of world
economy on China makes global economy vulnerable to a decline in economic growth of China.
Discussion
Starting from a fall in global oil price during August 2014, there is a growing concern in
the world economy regarding slowdown of economic growth rate in China. Currently, the
economy of China is accounting a slower pace of growth compared to the average growth in the
last three decades. Based on the recent growth estimates, the future growth estimates for China
also seem to be very low (Xu 2019). Because of a below average growth rate of China, all other
nations depending on China experience a slow growth rate. For example, the expected growth
rate for South East Asian region was 5.8 percent in 2015 as against a growth rate of 6.2 percent
in the previous year. In September 2015, manufacturing activities in China fell to the lowest
level in the last six and half years. The decline in manufacturing activity in China is largely due

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to economic transformation from an investment dependency towards consumption dependency
for fueling economic growth. The figure below shows trend in real GDP growth rate of China
Figure 1: Real GDP growth rate in China
(Source: Data.worldbank.org. 2020)
The economic slow-down of China and shifts from investment to consumption have a
disastrous implication for world commodity price. China is one of biggest importers of global
crude oil produced with the economy consuming one in every 13 barrels of crude oil globally. In
addition to crude oil China is also a significant importers of copper with importing 45% of
world’s copper and 50 percent of aluminium, gold, steel and nickel (Balding 2019). The rapid
decline in China’s demand of imported coals resulted in a crash in global commodity market. In
2015, there was a 25% fall in Bloomberg Commodity price index.
The first implication of this fall in global commodity price is the increased volatility of in
the market which hurt the revenue of all the energy and commodity exporting countries across
the world. As a consequence of China’s slow down price of Brent crude oil increased from $43
per barrel to $54 within span of one week (Barro 2016). Price again declined in the next week