The penetration rate of products exported from China to emerging markets is significantly lower than the global penetration rate, and there is plenty of room for improvement. In July, exports continued to be marginally grabbed from Europe and the US. In the long run, the share of emerging markets is trending upward.
The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that the penetration rate of products exported from China to emerging markets is significantly lower than the global penetration rate, and there is plenty of room for improvement. In July, exports continued to be marginally grabbed from Europe and the US. In the long run, the share of emerging markets is trending upward. On a month-on-month basis, the share of exports to the US has increased month by month since 2024Q2, and the share of exports to the EU also rose sharply in July. In terms of key categories, optical modules/lawn mowers/treadmills/panels/thermos cups/motorcycles, etc. maintained a high growth rate, and exports of air conditioners/new energy vehicles/commercial ships/cables showed a marked increase in the year-on-year growth rate; according to regional distribution, the categories that accounted for a relatively high share of emerging markets in July include construction machinery/special equipment (mainly TOB), electronics industry chain support/textile and garment intermediates. Focus on air conditioning/refrigerators, cables, commercial ships, and semiconductor industry clues.
The main views of CITIC Construction Investment are as follows:
Penetration rate thinking: There is clearly plenty of room to increase the penetration rate of China's key commodities in emerging markets.
On a global scale, China's NEV exports account for only 13.8% of the total global export value. Motorcycles/buses, commercial ships, PCBs, transformers, etc. are in the 30%-50% range. In comparison, the penetration rate of products exported to emerging markets (Middle East+Africa+Latin America+Southeast Asia+Central Asia and South Asia) is significantly lower than the global penetration rate, and there is plenty of room for increase in the penetration rate. This is also one of the important reasons why China's export share to emerging markets has continued to increase in recent years.
Overall exports: Continuing to marginally grab exports from Europe and the US; in the long run, the share of emerging markets is trending upward.
In July, China's share of exports to ASEAN, Latin America, and other regions of Asia increased the most, rising 0.7/0.5/0.3 pct respectively. ASEAN currently ranks as China's largest trading partner. Furthermore, China's overall export trend to emerging markets has been rising month by month; on a month-on-month basis, the share of exports to the US has also risen sharply since 2024Q2, and the share of exports to the EU also rose sharply in July. Marginal export grabbing to Europe and the US continues. It is expected that export grabbing will continue before the US election.
Growth rate of key categories:
1) Maintaining high growth: Exports of lawnmowers/motorcycles/panels/semiconductors have maintained a high year-on-year growth rate.
2) Growth rate jump: The year-on-year growth rate of exports of air conditioning/new energy vehicles/commercial ships/cables increased markedly. The export value growth rate of lithium batteries/inverters changed from negative to positive in July compared to June, and both continued to improve year-on-year growth rates since May.
Regional distribution of key categories: In July 2024, important segments that are highly dependent on the US are mainly focused on optical modules/home appliances (non-white electricity) /light industry/textile clothing; important segments that are highly dependent on the EU and the UK mainly focus on the new energy industry chain/TOC special equipment/ships/small household appliances/new energy vehicles, etc.; categories with a high share of emerging markets include construction machinery/special equipment (mainly TOB), electronics industry chain support/textile garment intermediates.
Key regional observations: 1) Southeast Asia: Consumer electronics/communication equipment continued to increase year-on-year, and the share of Southeast Asian exports was high; 2) Middle East: New energy vehicles continued to increase, and the growth rate of the new energy industry chain declined somewhat; 3) US: The overall growth rate expanded significantly compared to June, black electronics/lithium batteries are bright; 4) EU and the UK: Lawnmowers are growing faster, color TVs are better, and new energy sources have not improved.
Conclusions:
July export boom clues - air conditioning/refrigerators, cables, commercial ships, semiconductor industry chains.