Over the past ten years, there has been a significant growth in inter-regional trade that was facilitated by regional trade blocs. Some of the four main regional trading blocs include the European Union (EU), North American Free Trade Agreement (NAFTA), Association of South Eastern Asian Nation (ASEAN), and Mercosur that comprises of countries in South America. Countries within the four major trading bloc account for most of the global trade. Due to the rapid growth in Asian countries, especially China, Japan, Taiwan, and Singapore, Asia accounts for over 41.7% of goods exported globally, followed by Europe at 37.5%, North America at 13.5%, South America at 2.9%, and Africa at 2.4% (Workman, 2018). Additionally, Asia also accounts for most of the global imports, followed by Europe, North America, South America, and Africa.
Additionally, figures 1 and 2 show the increasing regional trade flows between 2002 and 2012. However, it also shows some significant regional patterns:
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The relative isolation of most parts of Sub-Saharan Africa
The integration of Asia with Europe and the US
The increasing commodity driven surplus between the Middle East and Asia
The integration of emerging countries in Europe with the European Union but limited integration with the rest of the world.
The increasing integration of South America with North America but limited integration with the rest of the world.
Notably, one of the most significant changes in the two regional trade flows is the significant increase in trade between Asia and the rest of the world that is mainly attributed to China. Over the past three decades, the Chinese economy grew at an average of 10% annually (Jun, 2019). The middle class in China has a population of approximately 300 million with an average net worth of $139000 per person (Jun, 2019). The spending power of the middle class in China is worth about $28 trillion in comparison to $16.8 trillion in the US and Japan’s $9.7 trillion (Jun, 2019). The spending power of the Chinese middle class is having a significant impact on global trade. Since 2008, China has been the leading auto purchaser globally (Jun, 2019). Most of the vehicles are purchased from Europe and the US thus boosting trade between the three regions. Furthermore, the large population also accounts for global tourism. In 2018, over 150 million Chinese people visited foreign countries especially Europe and the US (Jun, 2019).
Notably, China's trade with the rest of the world is being facilitated by the ‘revival' of the Silk Road. The Silk Road was a major trade route that connected China to other countries in Asia, Europe, the Middle East, and Africa (Jun, 2019). Other than exporting machinery and other accessories to the rest of the world, China has also become a huge market for goods from other regions because of its large population. Between 2008 and 2018, China’s economy tripled in size and its gross domestic product (GDP) reached $13.6 trillion (Jun, 2019).
The manufacturing industry has been the economic engine of China’s growth. It is important to note that China's leaders initially developed a manufacturing hub where high-quality goods could be manufactured at a lower cost than in developing countries. However, increased export also increased the country's integration with the rest of the world. Currently, China is a global leader in mobile payments and e-commerce. Mobile payments in China amount to approximately $24 trillion, a figure that is 160 times bigger than the US figure (Jun, 2019). Although some critics claim that the rapid growth of Chinese trade and investments globally is unsustainable, it is important to note that the growth has had a positive impact on other regions, especially Europe, the US, and the Middle East.
References
Jun, Z. (2019). What China’s period of rapid growth means for the rest of the world: World Economic Forum. Retrieved from https://www.weforum.org/agenda/2019/04/china-s-decade-of-sweeping-economic-change/
Workman, D. (2018). Top Continents for imported and exported products. Retrieved from http://www.worldstopexports.com/top-continents-for-exported-products/
