Electrical Equipment / Components & Telecoms

Benefiting from the gradual recovery of the global economy and the increase in external demand, China's foreign trade of mechanical and electrical products has continued to boom this year. International demand for key mechanical and electrical products such as computers, mobile phones, semiconductors, automobiles, home appliances, and photovoltaics has generally increased. Gao Shiwang, director of the Industry Development Department of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, predicts that China's import and export volume of machinery and electronic products is expected to maintain rapid growth in 2021.

In the first half of this year, many international organizations successively raised their expectations for global economic growth. For example, in April, the International Monetary Fund raised its forecast for global economic growth in 2021 to 6%; in June, the World Bank raised its forecast to 5.6%; JPMorgan Chase's global manufacturing PMI reached 56% in May, the highest level in the past 10 years. From the perspective of capacity utilization, the restoration of the production side in developed countries is almost complete. For example, the U.S. manufacturing capacity utilization rate was 75.6% in May, which was the same as in December 2019; the German manufacturing capacity utilization rate in the second quarter was 85.7%, which is the same as in 2019. Flat in the first quarter.

The advantages of the capacity scale and supply efficiency of China's electromechanical industry are even more pronounced in the case of repeated global epidemics. The export value of more than 70 kinds of commodities such as notebook computers, mobile phones, lamps and microwave ovens in China ranks first in the world, and the export value of more than 200 kinds of commodities ranks second in the world. Among the more than 2,600 eight-digit tariff codes, about 70% of the commodities can achieve an annual trade surplus. China is an important producer and exporter of electromechanical products in the world, with a relatively complete supply chain, high efficiency, and a comparative advantage in prices.

Although factors such as raw material prices, high shipping costs, and exchange rate fluctuations still plague companies, China's foreign trade imports and exports are still in a window period. "The second half of the year is the traditional peak season for the export of mechanical and electrical products. Although the growth rate may slow down due to the base number, for the whole year, China's mechanical and electrical products import and export are expected to achieve double-digit growth." Gao Shiwang said.

General increase in import and export markets

According to statistics from the General Administration of Customs, in the first seven months of 2021, exports of mechanical and electrical products increased by 36.3% year-on-year to 1.06 trillion yuan, imports increased by 28.9 to 637.21 billion US dollars, and a cumulative trade surplus of US$425.52 billion was achieved.

From the perspective of major markets, the export value has increased significantly. In the first half of this year, China’s exports of mechanical and electrical products to the "Belt and Road" countries increased by 37.7% year-on-year, exports to RCEP countries increased by 30.2%, exports to the EU increased by 46%, ASEAN exports increased by 33.6%. In terms of export destinations, the United States, Japan, South Korea, and Vietnam are in the forefront, and the growth rate of exports to Vietnam and the Netherlands is even higher than the same period in 2019. The US market has played an important leading role in the recovery growth of China's exports of mechanical and electrical products. "In the first half of this year, China's exports of mechanical and electrical products to the United States, in addition to notebook computers, mobile phones, tablet computers, but also sports fitness equipment, electric toys, video game consoles, lithium batteries, lamps and so on." Gao Shiwang said. Vietnam has the largest increase in China's top ten export markets, mainly driven by products such as liquid crystal display panels, lithium-ion batteries, integrated circuits (used as memory), and mobile phone components. In the first half of the year, China's mechanical and electrical exports to India reversed the decline since last year. In 2020, the only market with negative growth among China's top ten mechanical and electrical exports increased by 63.4% year-on-year and 24.4% year-on-year.

From the perspective of the source of imports, China's dependence on imports of core components and equipment from Japan and South Korea has increased. South Korea is one of the most important sources of China's integrated circuit imports, and its product structure is dominated by memory. In the first half of the year, China imported 39.38 billion U.S. dollars of integrated circuits from South Korea, accounting for 19.9% of China's total imports of this product. In addition, Japan and South Korea are also the main sources of China's imports of semiconductor equipment, with a total share of 46.3%, and the product's share of imports from the United States is 17.5%.

High growth in key industries

In the first half of this year, the export and import growth rates of China's key industries of mechanical and electrical products generally reached double digits. In terms of exports, computer products, mobile phones and integrated circuits are the top three types of mechanical and electrical products exported by China, which together accounted for 27.3% of the export share of mechanical and electrical products in the same period. Affected by a decline of 9.2%, the export pull rate of the above products fell to 7.8% in the first 7 months.

According to statistics from IDC, an international data company, global personal computer shipments in the first quarter increased by 55.2% year-on-year, and in the second quarter it increased by 13.2%, showing a slowdown in growth. Analyzing the reasons, Gao Shiwang said: "Due to the high base caused by the concentrated shipments in April and May last year, the export value of this product in April this year increased slightly by 0.8% year-on-year, and in May it fell by 3.9% year-on-year. The cumulative exports in the first half of the year were The amount increased by 25.9% over 2019. "In July, computer product exports were 21.37 billion U.S. dollars, a year-on-year increase of 11.6%, close to the highest value in history.

Data show that in the first seven months of this year, China’s mobile phone exports were US$74.94 billion, an increase of 25.6% year-on-year, and the export volume increased by 9.4% year-on-year to 531 million units. The two-year average growth rates were 13.7% and 2.1% respectively. China's integrated circuit exports increased by 31.1% year-on-year to US$79.78 billion, which is the 31st consecutive month of positive growth. China's export volume of complete vehicles increased by 113.8% year-on-year to 1.111 million units, and the export value increased by 119.8% year-on-year to US$17.61 billion.