Diamonds and Eels: How China’s Goods Are Going Global

Before China officially joined the World Trade Organization (WTO) on Dec. 11, 2001, many of its industries were relatively weak, leading to concerns about their ability to compete globally. However, over the past 23 years, China’s international trade has seen exceptional growth. According to the WTO’s Global Trade Outlook and Statistics report, China maintained its position as the world’s largest goods trader in 2023 for the seventh consecutive year.

This momentum is expected to continue this year. Data released on Dec. 10 by China’s General Administration of Customs shows that in the first 11 months, the country’s exports and imports both exceeded last year’s levels. The trade surplus also increased to $885 billion, up by more than 8% on the previous year.

What’s been behind this year’s stable growth? At a recent news conference, Wang Lingjun, vice minister of the General Administration of Customs, cited two key factors: the recovery in global demand, which has created favorable conditions for exports, and improvements in productivity and advancements in manufacturing, with clear trends toward high-end, intelligent, and green production.

Wang said that China’s exports to traditional markets such as Europe, the United States, and Japan grew by 4.2% in the first three quarters of 2024. Meanwhile, exports to two emerging markets, namely member countries of the Association of Southeast Asian Nations (ASEAN) and Latin America, rose by 12.3% and 13.7%, respectively.

Over the past decade, China’s export structure has diversified, with significant growth in trade with emerging markets and developing economies. ASEAN, Latin America, Africa, and other such regions have gained prominence in terms of exports.

As the third-largest economy in Asia, the ASEAN bloc — a union of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — has experienced impressive economic growth in recent years, highlighting its vast market potential. Facilitated by the development of the China-ASEAN Free Trade Area, the bloc has been China’s largest trading partner for four consecutive years. The proportion of exports to ASEAN member states has risen from 6.9% at the start of this century to 16.3% today.

Moreover, under the frameworks of the Belt and Road Initiative and BRICS — an intergovernmental organization comprising nine developing economies — China’s trade with both Africa and Latin America has grown frequent and robust. In contrast, the relative share of traditional markets, namely Europe, the U.S., and Japan, has declined.

Japan has experienced the biggest drop, with its share of Chinese exports falling from 16.7% to 4.3%. Similarly, since 2018, trade tensions have reduced China’s export share to the U.S. from around 20% to 14%. Despite challenges, in the first 11 months of 2024, China achieved a trade surplus of $326.84 billion with the U.S.

Since 1995, mechanical and electrical (ME) products have consistently been China’s leading exported commodity. This category spans a wide range of items including machinery such as machine tools and forklifts, electronic products like cell phones and computers, and transportation equipment such as motor vehicles and ships. According to customs data, the export value of ME products reached $1.93 trillion in the first 11 months of this year, accounting for 59.45% of China’s total exports.

In August, the country exported the world’s largest floating production storage and offloading platform from coastal Nantong, in the eastern Jiangsu province, to Brazil. This single export weighed 137,299 tons and was valued at $1.5 billion.

However, such isolated, high-value deals are rare. The substantial export figures for ME products are mainly the result of numerous smaller transactions. For example, in the first 10 months of this year, China exported 27.41 million washing machines, 53.04 million air conditioners, 91.78 million television sets, and 139.32 million vacuum cleaners globally. ME products now account for nearly 60% of China’s total export value.

Beyond ME products, other export categories also feature products with significant trade volumes. For instance, eels, a delicacy in Japan, are primarily supplied by China, the world’s largest producer, processor, and exporter of the fish. In the first 10 months of this year, China exported 12,700 tons of live eels, with over half sold to Japan.

By 2022, China’s eel industry employed over 300,000 people and achieved an annual output value exceeding 30 billion yuan (then about $4.46 billion), according to Farmers’ Daily reports. Eels have long been China’s top single seafood product in terms of foreign exchange earnings.

Another notable product is diamonds. While traditionally marketed as symbols of eternal love, a feature buoyed by their expense, the price of natural diamonds has dropped due to the rise of lab-grown diamonds from China. This year, China has already exported 3.74 billion carats of synthetic diamond powder and 4.30 tons of synthetic or reconstructed diamonds, with the central Henan province contributing 51.9% and 85.5%, respectively.

China dominates upstream production of rough synthetic diamonds, while India leads in midstream diamond processing. Of that 3.74 billion carats of synthetic diamond powder, 1.13 billion carats went to India. However, the South Asian nation is actively seeking to expand into upstream production due to its higher gross profit margins — around 60% for producing rough diamonds compared with just 5% to 10% for cutting and processing them.

Adding value

Like lab-grown diamonds, many manufacturing industries follow the “smile curve,” where profits are concentrated in the upstream and downstream segments, while the midstream segment yields thinner margins. In 2011, Pascal Lamy, former director-general of the WTO, suggested that a better measure of global trade is trade in value added, or TiVA.

For a long time after China joined the WTO, global value chains in East Asia were dominated by developed economies such as the U.S. and Japan, which controlled high value-added processes including research and development, design, and marketing. Countries like China and Thailand primarily served as midstream processing factories, responsible for relatively low value-added processes.

However, China has been steadily moving up the value chain. According to the TiVA database released by the WTO and the Organisation for Economic Co-operation and Development (OECD), China’s share of export value-added in the high value-added machinery and equipment sector has risen from 2.5% of the global total in 2000 to 5.5%.

In the first decade of this century, exports of apparel and steel were key drivers of China’s trade growth. But in recent years, automobiles have emerged as a new growth engine. In 2023, China surpassed Japan for the first time to become the world’s largest automobile exporter. The momentum has continued this year: 4.86 million vehicles were exported in the first 10 months, with new energy vehicles (NEVs) accounting for 22%, according to the China Association of Automobile Manufacturers.

NEVs, along with lithium batteries and solar panels, form China’s “new trio” in foreign trade. Customs data shows that the combined export value of these products reached 1 trillion yuan ($150.5 billion) last year, up by 900% from a decade ago.

China’s export portfolio is undergoing a significant transformation and upgrade. While labor-intensive products remain a competitive advantage, the share of technology- and capital-intensive products in exports is steadily rising. In particular, complex mechanical and electrical products are becoming a central driver of export growth, enhancing the resilience of the country’s export market.

Reported by Lu Jia’nan and Chen Liangxian.

A version of this article originally appeared in The Paper. It has been translated and edited for brevity and clarity, and is republished here with permission.

Translator: Chen Yue; graphic designers: Wang Yasai and Luo Yahan; editors: Wang Juyi and Hao Qibao.