China’s Canton Fair highlights changing nature of nation’s manufacturing industry amid US trade war

Tariff war launched by US President Donald Trump in June 2018 accelerated changes in China’s manufacturing and export industries that were already under way

Some 200,000 potential buyers will still visit 60,767 exhibition booths in Guangzhou during the three week fair as China hangs onto its manufacturing role

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China’s role in global value chains, its unfettered access to global markets and the prospects for the country’s massive export apparatus that directly and indirectly employs 180 million people has been hit bu the trade war with the United States. Illustration: Lau Ka-kuen

Published: 6:00am, 25 Oct 2019Updated: 6:59am, 25 Oct 2019

When US President Donald Trump imposed tariffs on the first batch of imports from China in June 2018, a move which led to the start of the trade war between the world’s two largest economies, Chinese researchers put on a brave face, arguing that the levies would only have a marginal impact on exports and, therefore, on the overall economy.

That optimism was supported by facts. Among China’s total exports of US$2.3 trillion in 2017, shipments bound for the United States accounted for 19 per cent, suggesting that they played only a marginal role in supporting Chinese economic growth. Wei Jianguo, a former vice-minister at the Ministry of Commerce responsible for foreign trade, even suggested in late 2018 that Africa could replace the US to become China’s top export market by 2023.

But after 16 months of tit-for-tat trade tariffs, it is increasingly clear that the impact of the trade war has grown well beyond the question of whether African clients will buy as many Chinese goods as American consumers. At stake now is China’s role in global value chains, its unfettered access to global markets and the prospects for the country’s massive export apparatus that directly and indirectly employs 180 million people.

The trade war has accelerated changes in China’s traditional manufacturing and export industries that were already under way, with the nation gradually shedding its low value-added, labour intensive industries in favour of high value-added, hi-tech sectors highlighted in the controversial “Made in China 2025” industrial policy blueprint. This is seen by the Chinese government as the key transition in the country’s economic future.

Around 200,000 potential buyers will still visit 60,767 exhibition booths in Guangzhou during the three week Canton Fair. Photo: Xinhua

But that observation does little to ease the increasing pain of the exhibitors of mostly low-end products at the Canton Fair, China’s oldest and largest export exhibition, which started last week in the southern city of Guangzhou.