China | Structural change of the trade: forced imports substitution industrialization

China's exports and imports are experiencing some structural change. The forced Chinese version of imports substitution industrialization indicates value chain upgrading and technology self-sufficiency.

Key points

• Key points:
• China is transferring from importing high-end final goods to importing raw materials and conducting high-end manufacturing domestically for technology self-sufficiency; in addition, China is experiencing the transformation from exporting lower-end manufacturing goods to high-end manufacturing goods.
• Recent import data shows that China continues to import large amounts of commodities and agricultural products, but imports much less of high-tech intermediate goods and high-tech final goods.
• Another feature of China’s forced Import substitution industrialization (ISI) is that China started to import more of raw materials (such as agricultural goods, copper ore and concéntrate etc.) and commodities but less of refined commodities.
• China has started to export more high-tech related products to different geographics, in particular, the most stunning performance is China’s Electronic Vehicles (EV) exports which takes a large share in global EV trade even in the background of weak external demand.
• Under the framework of value chain relocation outside of China and “China+1” strategy by multinational firms, the lower-end manufacturing exports from China is significantly declining while high-end exports is ramping up, indicating higher-end enterprises still chooses China for manufacturing

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