World Energy Outlook 2007

International Trade and Financial Flows
Economic growth in China and India affects growth in the rest of the world
largely through international transactions. The global impact of growing trade
with the two giants – especially China – has already been huge and, on current
trends, will increase further in the future. China has one of the world’s most
open economies: exports account for a remarkable 37% of the country’s GDP
(Figure 3.2). In India, the share is about 14% but has been growing rapidly
since the early 1990s. China and, to a smaller degree, India have been major
contributors to the massive expansion of global trade.
40%
Figure 3.2: Share of Exports in GDP in Selected Countries, 2006
30%
20%
10%
0%
Germany China Japan India United States
Sources: WTO and IMF databases.
The expansion of China’s trade with the rest of the world has been one of the
most striking global economic phenomena of the last quarter of a century.
China accounts for close to 8% of world exports and about 6% of world
imports (Table 3.1) – well above the country’s contribution to world GDP.
China is the world’s third-largest exporter, having recently overtaken Japan
(Figure 3.3). Chinese exports grew by 25% per year between 2000 and 2006
compared with 15% per year in the previous ten years. The importance of trade
to China’s economy reflects the high degree of integration of Chinese industry
into international production chains, particularly within Asia. Up to one-third
of the value of gross exports is estimated to come from imported inputs –
mainly parts and components for assembly into finished products and capital
equipment; most exports are finished goods (Winters and Yusuf, 2007).
Between 2000 and 2005, China accounted for 13% of the increase in world
exports of goods and services, and 10% of the increase in imports in 2000-
140 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA