China is now the world’s number one merchandise exporter, shipping US$957 billion of goods in the first 10 months of 2009 compared to second-placed Germany’s US$917 billion, according to Global Trade Information Services.
The news is hardly surprising. Fast-developing China has been playing closing in on more mature Germany for some years now. However, the global financial crisis saw the switch come sooner than expected as demand for Chinese low-cost consumer goods suffered less than that for German capital goods.
The fact that China’s factories are still churning out goods is a boon for German machinery makers. As we highlighted in a recent article, German manufacturers can rely on Chinese demand for equipment at a time when their core markets in the West are cutting back (although some tweaks to buisness models are required if this new balance is to be sustained).
What is most interesting is that these two export-heavy nations, from opposite ends of the development spectrum, are subjected to the same critique: They are too dependent on external trade and this comes at the expense of growth in domestic demand.
As the WSJ article notes, "Germany’s primary economic problem isn’t that the country exports too little, but that its own consumers don’t spend enough, which holds back its domestic service sectors… ‘Service sectors are more important for jobs that export industries, which tend to be very capital-intensive,’ says Elga Bartsch, an economist at Morgan Stanley in London."
Familiar words for anyone who has been following China these last few years.