Throughout recent years, the scope of global business and international trade has seen optimistic improvements. Analysts and companies are becoming more and more confident with regards to global trade and opportunities overseas. This confidence perhaps, more importantly, is as a result of the global trade growth exceeding initial forecasts. It could also be as a result of the stabilization of China’s economy and demand. These factors could be a pointer to the possibility of having a year without a major economic recession which has so far, been an elusive dream.
Why China is so important to the global economy
The Chinese economy is the largest contributor to the world GDP growth. This contribution is perhaps more so because the country is most likely unable to withstand a serious shock without toppling back into recession.
If the Chinese GDP grows to 7.0 percent in 2018 – in line with their official target – China will account for over 1.2 percent of the world GDP growth. The rest of the nations would contribute only 61 percent of the total. This contribution, given their numbers and as opposed to China is not particularly impressive. For example, the UAE’s economic growth is expected to accelerate to 4.4 percent in 2018 driven by rebound in investment, trade, and manufacturing. This is enough to contribute only about 0.7 percent to the overall world GDP growth which is slightly above one-fourth of China’s contribution.
Shaping global trade
For the first time in history, the world’s leading economic activity has experienced a great shift. The service sector has now become the world’s main economic driver accounting for 64 percent of global wealth. This is against a backdrop of industries such as Agriculture, Manufacturing, and Mining, among others. As it stands, sectors like banking, health, shopping and social work control the majority of global wealth and trade.
As would be expected, the United States still leads when it comes to service exports contributing more than 30 percent of the world’s service exports per year. China ranks a distant second with a gap of over 10 billion dollars in services per year between them.
Yet, China makes the most exports in the world overall. Their economy is still recovering and they have, meanwhile, reported an increase in imports and exports. The rise in the rates of lending and the decrease in prices still leave China unscathed. Economists expect that in the months to come, China will experience a decrease in the rates of imports and exports, but there exists a strong and constant demand from the United States and the European Union which could be highly beneficial for the Chinese economy.
However, depending on the strategies applied by other governments, they stand a chance of taking for themselves a piece of the pie. Employing strategies that will improve the service industry sectors could propel them to just where they wish they could be and the UAE has never been better placed for this as it is now. What with projects such as the Expo 2020 and others that are in implementation.
The UAE economy has, after all, been resilient to the impact of the slump in oil prices. It has also benefited from the diversity of economy excellent infrastructure and political stability it has.