We often use big, overarching ideas to help us understand the world and the opportunities contained within. These narratives, which can change over time, are used to create context. They give us a frame of reference for comprehending the news and events that affect our outlook on things.
China’s economic prowess is one of these new paradigms that has emerged, but many people still can’t really wrap their heads around the scale or scope of it.
It’s happened suddenly, and the ramifications are extremely relevant to our investments and understanding. Here’s four maps on China’s trade dominance that will help you think differently about the world:
China is the world’s #1 trade partner
Image courtesy of: Connectography
The United States is the number one trading partner for 56 countries, with important relationships throughout North America, South America, and Western Europe.
Meanwhile, China is the top partner for 124 countries, dominating trade in Asia, Eastern Europe, Africa, and Australia.
China’s Sphere of Influence
This map shows the portion of trade conducted by each country with China in Southeast Asia.
Image courtesy of: Stratfor
The influence that China has with nations in Southeast Asia is significant. Most trade is in double-digit percentages, and China views this as its immediate sphere of influence. Throughout history, territories in this region would even pay tribute to China to gain access to trade.
“In East Asia’s tribute system, China was the superior state, and many of its neighboring states were vassal states, and they maintained a relationship of tribute and rewards,” writes Liu Mingfu in The China Dream, a popular book about China’s plans to return to power.
Maintaining influence in Southeast Asia is part of the reason that Beijing is posturing in the South China Sea. In fact, China’s coastguard is growing so fast that in 10 years it will have more tonnage than all of the coastguards in Southeast Asia, the United States, and Japan combined.
Building a New Silk Road for Chinese Trade
Image courtesy of: Council of Foreign Relations
China seeks to increase trade ties with Asia and Europe even further by building a new Silk Road that puts even Marco Polo’s route to shame.
The Chinese transcontinental network, a massive infrastructure project pegged for completion by 2025, is expected to bring down overland travel time from Beijing to London to just two days. Currently, it takes 15 days for the journey.
The project’s aim is to shorten the time of bulk consumer-goods transport to Europe, while unlocking the economic potential behind Eurasian cities from Almaty to Tehran. The new Silk Road will include at least one high-speed line that goes 320 km/h, and the network will help to link up 70% of the world’s population in roughly 40 countries.
Infrastructure Override
You may have heard of the AIIB (Asian Infrastructure Investment Bank), which was officially launched at the end of last year. Initially proposed by China, the bank now has over a $100 billion of capitalization and 57 founding member states.
Image courtesy of: Reuters
While this shows China’s push for infrastructure especially to coincide with its new Silk Road, there is another very interesting detail: Beijing controls 26.06% of the votes, essentially giving it veto power as most bank decisions need 75% of the votes to pass.
In other words, only infrastructure projects that benefit Chinese trade will likely get the nod from Beijing.
http://www.wsj.com/articles/once-bustling-trade-ports-in-asia-and-europe-lose-steam-1461696304
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“At a logistics park bordering Shanghai’s port last month, the only goods stored in a three-story warehouse were high-end jeans, T-shirts and jackets imported from the U.K. and Hong Kong, most of which had sat there for nearly two years. Business at the 108,000-square-foot floor warehouse dwindled at the end of 2015 after several Chinese wine importers pulled out, said Yang Ying, the warehouse keeper, leaving lots of empty space. The final blow came after a merchant turned away a shipment in December at the dock. “The client told the ship hands, just take the wine back to France,” Ms. Yang said. “Nobody wants it.” Pain is increasing among the world’s biggest ports—from Shanghai to Hamburg—amid weaker growth in global trade and a calamitous end to a global commodities boom.
Overall trade rose just 2.8% in 2015, according to the World Trade Organization, the fourth consecutive year below 3% growth and historically weak compared with global economic expansion. The ancient business of ship-borne trade has been whipsawed, first by a boom that demanded more and bigger vessels, and more recently by an abrupt slowing. That turnabout has roiled the container-shipping industry, which transports more than 95% of the world’s goods, from clothes and shoes to car parts, electronic and handbags. It has set off a frenzy of consolidation and costs cutting across the world’s fleets. Ashore, it is also slamming ports and port operators, the linchpin to global commerce. Nowhere is the carnage more painful than along the Europe-Asia trade route, measuring roughly 28,000 miles round trip.
A cooling Chinese economy and a high-profile crackdown by Beijing on corruption has damped demand for everything from commodities like iron ore to designer scarves and shoes. Meanwhile, Europe’s still sputtering recovery from the global economic crisis is hitting the flow of goods in the other direction. On Friday, the Hong Kong Marine Department reported throughput for its port in the first quarter was off 11% from the first three months of last year. Throughput for all of 2015 also dropped 11%. “It is the first time you see people in shipping being really scared,” said Basil Karatzas, of New York-based Karatzas Marine Advisors and Co.”
China is still buying up American properties as well, HNA Group is going to purchase Carlson Hotels, which owns Radisson and Country Inns and Suites.
Trading their dollars for assets, I wonder why………..
https://www.facebook.com/Canadians-against-McCormicks-importing-Chinese-honey-321798484672543/
Llpoh!
China is in the news again, trying to purchase 1% of the land mass of Australia.
Once they get their foot in the door………….