In this third edition of Current Accounts, the Hinrich Foundation's podcast on global trade, our Research Fellow Stewart Paterson speaks with Emily de la Bruyère, co-founder of Horizon Advisory and a Senior Fellow at the Foundation for the Defence of Democracy, on China’s growing global export prowess, its leverage on world markets, and trade dependency in the technology sector.

When China joined the World Trade Organization in 2001, it accounted for about 4% of global exports. That figure had risen to 15% in 2022. China’s growing export prowess reflects its dominance in global markets. Today, China maintains oligopolistic power in technology-oriented sectors and manufacturing exports, de la Bruyère said. 

The view that China remains the factory of the world for low-end consumer products is outdated. The nation has moved up from the lower rungs of critical value chains, and now enjoys comparative advantages in the higher value-added end of the chain. However, rather than being a market-driven outcome, this dominance, especially in technology, derives from a larger state-driven strategy for China to gain leverage and project its power internationally, she said.

Scale matters. China’s success is in large part due to its huge and centralized state system. Its ability to decide which sector to prioritize, identify champions within those sectors, provide generous capital and funding, and leverage on strong network effects to scale cannot be overstated. In Bruyére’s view, the role of the Chinese government in amplifying market advantages through subsidies and lower regulatory standards to encourage vertical and horizontal integration is critical for Chinese companies to build as much scale as possible. 

While China expands its reach across global markets, regulatory bodies such as the WTO is key to ensuring fair play amid increasing competition and trade tensions. However, the effectiveness of such international institutions has deteriorated in recent years amid rising global geopolitical tension. Trade policies have become so intertwined with national security that geopolitics now often dictates or muddles trade relations. Paterson and de la Bruyère discuss these complexities in this Current Accounts podcast.

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