Have you ever wondered why some countries find it great trading with China? Well, read on and see why they keep hanging on.
Assuredly, many countries have benefited from trading with China- even the most powerful countries like the United States of America, Australian, among many others. Countries that have partnered with China has shown an amazing economic transformation. For instance, the agreement that China entered with Australia (China Australia Free Trade Agreement) has made Australia skyrocket in trade.
Key Facts that contribute to trading with China
- China has a huge population- more than 1.42 billion people inhabit there.
- China is the pioneer trading nation and the number one manufacturer by output.
- In research done in 2018, China emerged the second country after the United States to have the largest GDP
- The annual china’s GDP exceeds 6% as their economy continues to mature.
- In the past three decades, China has exceeded a 10% GDP growth rate. Even better, it has consistently gone beyond 7%.
- China’s household incomes are rising significantly. It’s now estimated that more than 400 million Chinese belong to the middle class. Surprisingly, it was estimated that by 2022, more than 550 million people would be in the middle class.
- By 2030, 70% of the China population is estimated to be ranked in the middle class.
- Above all, China is the biggest trading partner for many countries by a huge margin.
What do all these facts indicate? They indicate that China can help a country improve its productivity. Due to its large population, a country can export its goods and reap huge profits.
On the other hand, their GDP means they produce lots of goods with cheap labor. Therefore, countries can benefit from the low price they offer their goods.
Endless Opportunities in China
Once a country agrees to trade with China, that country eases the processes of trading with/in China. In other words, that country opens up unprecedented opportunities and access across various spectrums of industries in China. Once the country embraces such opportunities, it can start benefiting for being in the World’s most spectacular nation. The industry opportunities created from the agreement boosts the economy, cultural, and strategic relationship between the two nations.
The two-way trading with China in goods and services can be significant to an economy. For instance, assume that a country A trades with china goods worth $350 billion. The country imports $150 billion in merchandise while China spends $200 billion on exports from Country A. Doubtlessly, that country will have benefited greatly from the trade with China.
China has Advanced Technology
Some countries have underground resources that they can’t refine by themselves, such as gas, coal, gold, and iron ore. China imports such resources since they can refine them at a cheaper cost. A country that China has partnered with to import such resources can find it difficult to let go of the relationship since such a nation has no other market.
In the above facts, we’ve found that the population is high, and the people in the middle class in China are increasing fast. What does that mean? China demands fresh agricultural products and processed food to cater to it’s growing population.
China’s Large Economy Needs Education
Far away from the foodstuffs, the large population also requires education, professional services as well as tourism services. So, if a country has entered in agreement with China for such things, it finds it difficult to decline the agreement.
Moreover, some countries have a great relationship with China in terms of education. So, if that country has an international reputation of offering high-quality education, you can find that more than 200,000 Chinese students are enrolled in that country’s universities, colleges, and other learning institutions.
Approximately, such students can account for multi-million dollar education export sector. The education sector will, therefore, call for a free trade agreement, having new rights to market easily and directly to the Chinese students.
China has Available Markets for Agricultural Produce
Another interesting thing about trading with China is that when a country agrees with China, the export of agricultural products and processed foods from that country to China becomes bright. Chinese consumers keep on increasing, and once they realize that a country can supply them with quality products, that country can make lots of profits from that trade.
Additionally, a great trade relationship with China offers amazing market access to its market. China removes all tariffs on the country’s export of goods such as seafood, beef, dairy products, and lamb.
China also removes tariffs to countries that export wine and other processed goods like honey, fruits as well as manufactured products such as pharmaceuticals, among others.
Trading With China Helps Third-World Countries
Lastly, trading with China helps Third World countries and also low-income households from developed countries. Many countries import billions of dollars worth of goods from China, such as electronics, clothing, household appliances, shoes, and furniture. Those imports help in improving the lives of many people, particularly low-income households and developing countries that benefit from lower prices on daily goods.
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