No large country in the world has ever managed sustained high growth without exports. India can't be an exception if it has to achieve high-income nation statusPrefer HTon Google The first and second parts of this series discussed India’s manufacturing predicament in detail. No large country in the world has ever managed sustained high growth without exports. India cannot be an exception if it has to achieve high-income country status. Meanwhile, the world has changed from the days when exporting to advanced countries was the path to wealth.HT fileChina now runs a bigger trade surplus with the rest of the world than with the G7For much of the past three decades, China’s trade surplus looked primarily like a rich-world problem. The G7— Canada, France, Germany, Italy, Japan, the UK and the US—bought far more from China than it sold there. China ran a $314 billion surplus with the G7 in 2007, more than twice its $144 billion surplus with everyone else, according to data from OECD’s Balanced International Merchandise Trade Statistics (BIMTS), which balances reported bilateral trade values and adjusts them for re-exports. That is now changing. As of 2024, China’s surplus with the G7 stands at $511 billion, while its surplus with the rest of the world ballooned to $676 billion. The latter overtook the former for the first time in 2023.The real contest is now in third-country marketsIn 1995, for every $100 worth of goods the G7 exported to countries outside China and the G7 itself, China exported barely $7. However, as of 2024, this is as much as $69 for every $100 exported by the G7 to the same third-country markets. A recent study published by the Kiel Institute for the World Economy, finds that China’s export gains are increasingly concentrated in machinery, vehicles, chemicals and other complex manufactures long dominated by advanced economies. “China’s move toward more complex products, together with its export growth in these categories, has strongly affected advanced economies since a major competitor has emerged that is growing precisely in the product categories in which these countries specialize,” said the report. To be sure, G7 is still increasing its exports, China is just doing it fasterTo see what has changed, it helps to split the years since 1995 into four phases. The years 1995-2000 give us a pre-WTO baseline—China was already gaining ground, with its exports to third markets growing at a rate of 10% annually, compared with 2.3% for the G7. China’s accession to the World Trade Organization in 2001 then ushered in what the US Federal Reserve in a recently published note called the first “China shock”. The next period, 2007-18, captures the much slower global financial crisis and post-crisis era of global trade. Finally, 2018-24 covers what the US Fed calls “China Shock 2.0,” a renewed export push from a country that was already the world’s dominant goods exporter.