China Market Analysis

■ The World’s Second-Largest Economy and a Rapid Post-COVID Recovery Leader

As of 2020, China ranked second globally with a GDP of $14.7 trillion (World Bank) and was home to the world’s largest population of 1.4 billion.
China was the first major economy to recover from the COVID-19 pandemic, thanks to strict containment measures and aggressive vaccination campaigns. By the end of 2021, an estimated 85–90% of the population was covered by vaccination.

■ A Promising Import Market with Diverse Consumer Segments

China is the world’s second-largest consumer market after the United States.
Demand continues to rise for both essential consumer goods (e.g., cosmetics, food) and high-tech products (e.g., semiconductors, display equipment, new energy vehicles), offering strong potential for Korean exports.
Economic growth has diversified consumption patterns, with significant growth in the middle class, female purchasing power, the senior economy, and Gen Z consumers.

■ Robust Export Growth and Widening Trade Surplus

China’s total trade volume reached ¥28.3 trillion, up 22.7% YoY.
- Exports: ¥15.55 trillion (+22.7%)
- Imports: ¥12.78 trillion (+22.6%)
The growing trade surplus of ¥2.77 trillion is driven by:
1. Rebounding overseas demand, especially from the U.S.
2. China’s early recovery from COVID-19 and supply chain stability
3. Higher prices for key export goods

■ Top Trade Partners (as of Sept. 2021):

Export destinations: The top 10 countries/regions accounted for 52.75% of total exports.
Import origins: The top 10 accounted for 54.34%, with Taiwan and South Korea as the top sources.

■ Import Regulations and Non-Tariff Barriers (NTBs)

As of June 2021, China implemented 121 trade remedy measures:
- 111 anti-dumping, 10 countervailing
- Concentrated in chemicals (81), metals (11), and other sectors
Common NTBs include product registration, labeling requirements, certifications (e.g., CCC), and licensing.
- For example, imported food is subject to multiple regulatory layers, including CFDA registration and label inspections under specific food safety laws and standards.

■ Center of Global FDI: No.1 in Outbound, No.2 in Inbound

In 2020, China ranked:
- 1st in outbound investment: $153.71 billion (+12.3% YoY)
- 2nd in FDI inflows: $149.34 billion (+5.7% YoY)

■ 14th Five-Year Plan (2021–2025) FDI Targets

Goals include attracting $700 billion in actual foreign investment by 2025, with 30% directed into high-tech industries.
Supporting policies include:
- Further opening of key sectors
- Streamlining of negative lists
- Reduced entry barriers in priority industries

■ Foreign Investment Regulated via a Negative List

Only industries explicitly listed are restricted; all others are open to foreign participation.
China first introduced the foreign investment negative list in June 2017.

■ Encouraging Investment in Western & Central Regions + Priority Industries

China updates its Catalogue of Encouraged Industries for Foreign Investment annually.
Strong policy incentives for high-tech manufacturing and industries located in underdeveloped central and western regions.

■ Balanced Regional Development through PPP and New Infrastructure Initiatives

Public-private partnership (PPP) projects have surged, with over 10,000 projects launched since 2014 totaling ¥15.7 trillion in investment.

■ Infrastructure Investment Focused on Western and Inland Regions

In H1 2021, the highest growth in net project investment came from Guangxi (¥87.7B), Chongqing (¥68.0B), Sichuan (¥54.3B), Xinjiang (¥46.9B), and Shaanxi (¥37.9B).
Key areas: transportation, municipal engineering, rural development, education, and environmental protection.

■ Public Projects to Support Economic Stimulus and Sustainability

Government aims to:
1. Promote inclusive development in impoverished regions
2. Support eco-friendly, low-carbon projects
3. Expand PPP models to ensure fiscal sustainability

■ Regional Cluster Infrastructure to Accelerate

Major regional clusters such as the Jing-Jin-Ji area, the Yangtze River Economic Belt, and the Yellow River Basin are set to see intensified infrastructure development as part of balanced national growth efforts.