A breakdown of China-Asia trade by product and country suggests China’s declining export competitiveness in the region, particularly in light manufactures. Evolving regional patterns mirror a longer-term structural trend in China away from export-led growth centered on the processing trade, though stagnant imports of final goods do not yet reveal a shift toward consumption-led growth. Just as producer price gains have rolled over, China’s trade balances may rise in the coming months as the import prices that reduced surpluses in late 2016 and early 2017 are subsiding under tighter monetary conditions.
