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China's Foreign Trade

China's foreign trade has undergone a transformation over the past decades and now plays a decisive role in the global economy: the country is the world's largest exporter and the second-largest importer.

The Growth of Foreign Trade

Since the economic reforms of the 1980s, the growth of foreign trade has been continuous. While in 1980 China's foreign trade turnover was only 38 billion dollars, by 2004 it had already crossed the 1,000 billion dollar threshold. This dynamic expansion did not stop there: in the last twenty years, the turnover has multiplied further.

China's Foreign Trade

1. The Explosive Growth of China’s Foreign Trade Turnover

Foreign trade turnover reached the 1,000 billion dollar milestone for the first time in 2004, which fundamentally changed China's position in the global economy. Export growth has continued at an impressive pace since then—in 2023, China's exports exceeded 3.38 trillion dollars, accounting for nearly 14% of global trade. Within this, the export of pine lumber is particularly significant, purchased in large shares by the United States and European Union (EU) countries.

Import trends show a more volatile picture. While exports produce stable growth year after year, import volumes often fluctuate depending on internal economic conditions. For example, trends in timber prices and the decline in logging in Africa have a significant impact on China's log imports. This disparity results in a significant trade surplus, which reached 823 billion dollars in 2023. The development of domestic demand directly influences import dynamics, explaining the less predictable growth trajectory for imports. Furthermore, China's market diversification strategy plays a role in how import trends change regarding Russia and other countries. The launch of the "Dual Circulation" program is generally calculated from 2022; simply put, this encourages the Chinese population to consume various products produced within the country rather than foreign products. Surrounding this, naturally, is a collection of political-economic centralization steps, which are undisguisedly China's answer to the challenges posed by the new international political and economic situation. In Beijing, this is seen as the tool to lead China into the "new era."

2. The Role of Private Enterprises in Foreign Trade

Private enterprises now form the backbone of Chinese foreign trade. The dynamism of the private sector is evident in several areas:

  • More flexible market adaptation – Private enterprises react faster to changes in international demand.

  • Innovative product portfolio – Exploring new export markets and offering a diversified product range.

  • More efficient operations – Lower cost structures and more competitive pricing.

Regarding the import-export ratio, private companies conduct more balanced trade activities. While they hold a share of more than 50% in exports, they are becoming increasingly dominant players in imports as well, particularly in technology and raw material procurement.

3. The Impact of the Belt and Road Initiative on China’s Trade

The Belt and Road Initiative has fundamentally reshaped China's foreign trade map. Trade with countries involved in this project shows dynamic expansion—in the first three quarters of 2025, a 6.2% growth was registered in trade with Belt and Road countries.

  • The Impact of Strategic Collaborations: Strategic collaborations have opened new dimensions in international relations. China is consciously building its trade network in Central Asia, Southeast Asia, and perhaps most importantly for China, the African region. These countries represent not only new markets for Chinese products but also provide alternative sources of supply.

  • The Role of Infrastructural Developments: Infrastructural developments realized within the framework of the initiative—ports, railway lines, logistics centers—directly serve trade growth. Simplified customs procedures and various bi- and multipolar agreements further accelerate the movement of goods, which is reflected in measurable results in trade statistics.

4. The Significance and Trends of China’s Exports

Chinese exports have conquered global markets at an unprecedented pace over the past decade. In 2023, China's exports reached a record level, while the export of goods also diversified geographically.

  • Composition of Exported Goods: Electronic devices, telecommunications equipment, and semiconductors form the backbone of exported goods, but renewable energy technologies—especially solar panels and electric vehicles—represent an increasingly large slice of exports.

  • The Impact of Chinese Export Growth on the World Economy: Chinese export growth directly influences the global economy by providing cheaper consumer goods for developed countries and creating competition for local manufacturers.

  • Transformation of International Supply Chains: The dynamics of exports are reshaping international supply chains and strengthening China's position as an indispensable player in global production. From textiles to high-tech products, the wide product palette ensures that Chinese goods are present in almost every industry. We often overlook the fact that China occupies respectable positions in the commercial supply chain not only with "indigenous Chinese" companies and their products/services; thanks to the "Go Global" ambition—which included financial aid, lending, and acquisitions following the 2008 global crisis—it has also become a key player in the banking sector. Also as a result of "Go Global," they have acquired several companies known to us as Western, such as the German KUKA or the Swedish VOLVO.

5. Import Trends and Their Challenges in China

The slowdown in Chinese imports has become a particularly striking phenomenon in recent years. While exports are expanding dynamically, import volume periodically stagnates or even decreases, leading to the formation of a significant trade surplus.

It is a common misconception that the totality of sanctions introduced due to the war in Ukraine had a negative effect on Russian-Chinese trade relations. This is far from reality. There was, is, and currently appears will continue to be demand in China for cheap Russian raw materials, including timber, crude oil, and natural gas, as well as cheap, high-volume, and good-quality food. Furthermore, Russia has a great need for Chinese technological devices: chips, and various light and heavy industrial machinery usable for both civil and military purposes, partly due to the loss of supply from sanctioning Western countries and partly due to the nature of Russia's operations. Thus, overall, Western sanctions acted as a catalyst for Russian and Chinese trade relations, supported by the totality of new agreements and cross-border infrastructure investments already under development.

Since it affects it directly, the tariff war with the USA dealt a huge blow to the Chinese economy. The more protracted the clash becomes, the more these economic exchanges of blows test the stamina of China, and even the United States' economy. Global supply chain problems—such as container shortages and increased shipping costs—also contribute to changing import trends. During the post-pandemic recovery, many industries struggled with logistical obstacles that slowed the inflow of raw materials into China.

This does not mean that European/Western timber imports to China have been wiped out. The role of Germany, Sweden, and Canada in China's timber imports is particularly interesting. These countries export significant amounts of timber to China and fill the role of premium importers while also representing higher environmental standards. Germany has become a prominent player with its technological innovations and sustainable forestry practices, while Sweden and Canada provide necessary raw materials for Chinese industry with their rich forest reserves.

  • Import Challenges:

    • Declining consumer confidence holds back demand for foreign products, especially under the influence of the EU's new deforestation regulation (EUDR).

    • The import of industrial raw materials fluctuates depending on production cycles, which is also significantly influenced by the development of timber prices.

    • Despite government incentives, households prefer to save rather than spend, which correlates with changes in construction demand in China and Europe. However, this is not alien to Chinese society, as it possesses perhaps the world's highest private savings rate at 49%. The same figure hovers between 20-30% in Western countries. This gives banks huge room for maneuver regarding investments.

The development of domestic demand directly influences China's trading partners, for whom the Chinese market is a key export destination. Considering EU regulations and global economic trends, import challenges take on more complex dimensions.

6. Changes in Trade Relations Between China and the United States

US-China trade has undergone a dramatic transformation in recent years. Due to tariff wars and geopolitical tensions, the volume of bilateral relations has decreased significantly, prompting China to reassess its foreign trade strategy. Chinese trade diversification strategies have taken on a new dimension. Beijing is consciously building trade relations with Southeast Asia, Latin America, and Africa, thereby reducing its dependence on the American market. ASEAN countries have now become China's second-largest trading partner, overtaking the United States.

  • China's ambitions in new directions:

    • Active development of South American markets + mining and food industry.

    • Intensification of African infrastructure investments + raw material/rare earth metal extraction.

    • Strengthening Middle Eastern energy partnerships.

    • Building relationships with Pacific island nations.

The geographical realignment of Chinese trade is not merely a necessity but a strategic decision that results in a more stable and balanced foreign trade portfolio in the long term.

7. Strengthening Trade Relations with the European Union

Long-term cooperation is a strategic pillar for the economic stability of both regions. China has become one of the EU's most important trading partners, while the European market plays a critical role in Chinese exports. Chinese demand for high-tech products and luxury goods from the EU is continuously expanding, while China supplies the European market with competitively priced consumer goods and technological products.

The significance of the European market goes beyond momentary frictions: Despite current tensions and the narrowing economic and political room for maneuver of European countries, common interests continue to bind the parties together in stabilizing global supply chains and promoting sustainable economic development.

Another important factor is the growth of plywood exports to Africa, which also reflects the changing global market environment. As Africa's economies develop and urbanize, demand for construction materials, including plywood, increases. in this case, China acts not only as an importing country but also as an investor that stimulates demand for these products through infrastructure projects. At the same time, the European timber industry faces numerous challenges regarding the evolution of China's foreign trade. Tightening environmental regulations both in Sweden and globally influence log production and exports, while the transformation of China's own domestic market also affects the type and quantity of imported timber.

8. Market Entry Opportunities for Hungarian and European Companies

Entering the Chinese market offers serious business opportunities for Hungarian and European companies but requires thorough preparation. Understanding the local business culture, which differs significantly from Western practices, is essential for successful entry. Building personal connections (guanxi) plays a key role in every business transaction.

  • Market Entry Strategies Worth Considering:

    • Joint venture with a local partner – Reduces risks and facilitates the acquisition of market knowledge.

    • Establishing representative offices – A cost-effective method for establishing a market presence.

    • Using e-commerce platforms – Provides fast access to Chinese consumers.

Business opportunities in China are particularly attractive in the technology, environmental, and premium food sectors. Challenges include the bureaucratic system, language barriers, and the constantly changing regulatory environment. Thorough market research and appropriate strategic planning are key to success.

9. The Strategic Significance of China’s Foreign Trade

Today, Chinese trade is not merely a cross-border economic activity—it forms the backbone of international economic relations. China's position in global supply chains is so deeply rooted that it directly or indirectly influences a significant portion of the world's GDP.

  • Strategic significance is built on three pillars:

    • Technological dominance: China plays a leading role in the manufacturing of electronic components, renewable energy technologies, and semiconductors.

    • Market size: 1.4 billion consumers represent a huge target market for foreign products.

    • Infrastructure development: New trade routes are opening through the Belt and Road Initiative.

  • Future Trends: Future trends clearly point toward digitalization, green technologies, and the growth of service exports. China is actively diversifying its trading partners, reducing its dependence on any single market. Through the RCEP (Regional Comprehensive Economic Partnership) agreement, its position in the Asian region is strengthening, giving new dynamics to international economic relations.

Summary – What Should You Know About China’s Foreign Trade?

Chinese trade has reshaped the global economic landscape. The summary facts show clearly: China's foreign trade turnover has grown exponentially since the 1,000 billion dollar milestone, and the dominance of private enterprises has brought new dynamism to international trade. The global impact of the Chinese economy is no longer a question—it is a fact. Through the Belt and Road Initiative, China has opened new trade routes, while trade with the EU and other partners continues to expand. Diversification efforts reduce dependence on individual markets.

Why should you keep an eye on China's foreign trade? Because your decisions—whether you are looking for a supplier or entering a new market—depend directly on Chinese trade trends. Changes in import-export ratios, the expansion of the private sector, and strategic partnerships all influence your business opportunities. China's trade policy is no longer just a Far Eastern matter—it has an influence on your business environment as well.