An overview of the world’s largest exporters and importers underlines that international trade reflects market size but is also characterized by acute imbalances:
- Market size. The United States, Germany, China, and Japan are the world’s largest importers and, consequently, the world’s largest economies. The integration of China into the global economy has been accompanied by a growing level of participation to trade both in absolute and relative terms, improving the rank of China from the 7th largest exporter in 2000 to the third largest in 2005 and finally to the largest in 2008, supplanting the United States and Germany. It is important to underline the importance of countries such as the Netherlands and Hong Kong (a special administrative region of China). Belgium and Singapore are mainly attributed to re-exports since these countries act as major gateways to regional markets. For instance, more than 90% of Hong Kong’s exports are re-exports from mainland China.
- Trade imbalances. Some countries, notably the United States, the United Kingdom, and France, have significant trade deficits, which are reflected in their balance of payments. This aspect is dominantly linked with service and technology-oriented economies that have experienced a relocation of labor-intensive production activities to lower-cost locations. They are highly dependent on the efficient distribution of goods and commodities. Conversely, countries having a positive trade balance tend to be export-oriented with a level of dependency on international markets either for merchandises or commodities. Germany, South Korea, and China are among the most notable examples of countries dependent on merchandise exports (cars, electronics, apparel, etc.). China has a positive trade balance, but most of this surplus concerns the United States. It maintains a negative trade balance with many of its partners, especially resource providers (e.g. Australia). The Russian Federation and Saudi Arabia are examples of countries highly dependent on the exports of commodities, particularly petroleum, to maintain a sharp positive trade balance.
Historical evidence underlines that acute trade imbalances cannot be maintained indefinitely without an eventual readjustment. The surge in international trade, particularly after 2002, was linked with a phase of asset inflation (e.g. real estate bubble), particularly in the United States and several European countries (e.g. United Kingdom, Spain), coupled with massive borrowing using these assets as collateral. A share of this debt was used for the purpose of consumption of imported goods, which turned out to be unsustainable. This led to the financial crisis of 2008-09 and a substantial drop in global trade, which recovered afterward. Over the coming years, international trade will be readjusted to reflect production and consumption capabilities better.