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China’s B & R turns ancient routes into massive free trade zone

China’s ancient Silk Road derived its name from the international silk trade carried out along routes between China and the Mediterranean in the first millennium.

The goods were transported in large “camel caravans” in ancient times, but nowadays silk has been replaced by electrical and mechanical equipment while the camels have been overtaken by trucks, trains and planes.

China’s exports to Belt and Road countries in 2016 amounted to $587.48 billion, down 4.4 percent from the previous year. In return, China imported $366.11 billion of goods from countries along the routes last year.

Total trading volume between China and Belt and Road countries stood at $953.59 billion in 2016, making up 25.7 percent of China’s total global trade, slightly up from 25.4 percent in 2015 but down from 2014’s 26.1 percent, amid sluggish global economic growth.

China’s trade surplus with Belt and Road countries decreased 2.2 percent year-on-year in 2016, marking the first decline since 2011. The trade surplus expanded extensively from 2011 to 2015, hitting a level 16 times than that of 2011 in 2015.

Southeast Asia, WANT are China’s major trading regions

Southeast Asia tops both China’s export destinations and import regions.

In 2016, trading volume between China and Southeast Asia hit $455.44 billion, occupying 47.8 percent of the pie between China and the Belt and Road countries.

Next in line sits WANT (West Asia and North Africa). Its trading volume with China was $215.2 billion in 2016, 22.6 percent of China’s trade turnover with the Belt and Road countries.

With the global economy under downward pressure, trade volume between China and the Belt and Road regions in 2016 shrank compared with the previous year, except for Eastern Europe and South Asia.

Trade between China and Eastern Europe realized 2.7 percent growth in 2016, while China and South Asia hit a 0.3 percent growth rate.

The decline in 2016’s trading volume was 14.3 percent for East Asia, 13.3 percent for WANT, 7.9 percent for Central Asia, and 3.5 percent for Southeast Asia.

China is main export destination & import market for B & R countries

China’s top 10 trading partners in 2015 were Vietnam, Thailand, Indonesia, Russia, Malaysia, Singapore, Saudi Arabia, the Philippines, the United Arab Emirates (UAE) and India. China was also the largest import partner of the 10 countries.

In 2015, 34.7 percent of Vietnam’s imports came from China, while 20.6 percent of Indonesia’s imports and 20.3 percent of Thailand’s imports were from China.

China was Singapore’s largest export market, the second largest for Malaysia, Vietnam, Thailand, Russia and Saudi Arabia, as well as the third largest for India, Indonesia, the UAE, the Philippines, in 2015.

Six countries including Singapore, Vietnam, Malaysia, Thailand, the Philippines and Indonesia transported over 10 percent of their exports to China in 2015.

Top imports and exports in China

Electrical and mechanical equipment topped China’s exports to Belt and Road countries in 2016, with the export turnover reaching $116.5 billion, 0.4 percent down from 2015.

Ranked right behind in China’s 2016 exports were boilers & machinery, followed by iron & steel, plastics, and vehicles & parts.

The volume of China’s top 10 exports was down in 2016, due to slow growth in the global economy.

Fossil fuels made up the highest proportion of China’s imports, though the volume in 2016 dropped 15.1 percent year-on-year to $110.99 billion.

Electrical & mechanical equipment, boilers & machinery, plastics, and ores, slag & ash made up the rest of China’s top five imports list.

Goods like ores, slag & ash and wool or fine animal hair snatched over 50 percent of the turnover from East Asia (Mongolia in this case) to China last year, while in the other direction went boilers & machinery and fossil fuels.

Pearls, precious stones & metals and cottons pulled in 33 percent of South Asia’s exports to China in 2016.

Twenty-five percent of China’s exports to Central Asia were footwear and apparel last year.

Private sector the driving force in China’s exports

Privately-owned firms have continuously increased their stakes in China’s export turnover — from 46.6 percent in 2011 to 58.9 percent in 2016 — while the shares of foreign-invested companies (27.8 percent in 2016) and state-owned companies (13.1 percent in 2016) have decreased.

In 2016, foreign-invested companies contributed 37 percent of China’s total imports, and state-owned companies accounted for 31.6 percent, down from 43.1 percent in 2011, and privately-owned companies made up 28.2 percent.