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China on Way to Economic Upgrade Says Maersk CEO

Maritime Activity Reports, Inc.

September 17, 2012

China's decline in exporting this year may be a consequence of it becoming a manufacturer of more sophisticated products.

Soren Skou, CEO of Maersk Line, the container unit of the Danish shipping conglomerate AP Moller-Maersk Group, said that China's slowing trade growth suggests that the country "may have lost some of its competitiveness in some areas of the manufacturing sector", particularly in light industry, such as the production of toys, shoes and garments, as more companies have moved their manufacturing to neighboring Southeast Asian countries including Vietnam.

But Skou said the trend also makes clear that "Chinese companies are trying to move up the value chain to produce more expensive goods" in sectors including solar energy, automobiles and aviation, a development likely to shore up the country's exports in the long run.

David Skov, Maersk Line's regional head in South China, said the country's shift from labor-intensive to capital-intensive manufacturing is well under way, and this caused exports from the South China region - the country's light industry hub - to decline in volume but increase in value in recent years.

Exports of more sophisticated products are unlikely to offset the dip in volume in the short term, Skov said. But in the meantime, as household income rises, import increases are expected to surpass those of exports, he added.

"China's trade pattern is changing. And it is not all bad," said Tim Smith, Maersk's regional head in North Asia.

During the first eight months of this year, China's exports of machinery and electronic products surged by 8.3 percent year-on-year, accounting for 57.2 percent of the country's total export value, official data showed.


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