A trading nation, also known as a trading empire, is a nation in which international trade constitutes a high percentage of its gross domestic product. One distinguishing characteristic of such nations is the ability to gain access to foreign markets without having to face the difficulties inherent in trading within a domestic context. This is not only facilitated by the fact that trading nations have a huge economy but also because they are able to attract investors from all over the world, regardless of their national identities. As a result, a trading nation’s economy is capable of growth. While other nations experience a rapid rate of economic development due to globalization, a trading nation can sustain this rate of growth thanks to the low barriers to entry created by domestic factors.
As a result of its size and the above-mentioned factor, China is considered a trading nation. In fact, a recent study by McKinsey Global put China at the top of the list of countries with the most potential for international trade. As China is one of the fastest growing economies in the world, its share in global trade is only increasing. And since China houses the largest population and the largest economy in the world, it serves as the largest trading nation in the world.
China’s massive potential for international trade has made it a great force in world economy. However, a china that operates according to the rules of the market is far different than a china that is guided by political considerations. It is important to note that China’s rise to economic leadership has occurred despite global turbulence and the worldwide economic downturn. Economic analysts have cited the slowing of global growth as the main reason why China has chosen to take on economic risks and pursue a more aggressive role in international trade. The key reasons why China has chosen to take on more aggressive measures in international trade are as follows:
One of the major reasons as to why China has decided to go the extra mile in pursuing its economic expansion has been its fears of losing its unique competitive edge. China’s economy is unique because it possesses the lowest trade deficit in the world. This means that China must rely on exports of raw materials like coal and crude oil for domestic purposes, while relying on imports of consumer goods to make its exports cost effective. In fact, China’s gross domestic product grew at a pace of about 6% per year between 2021, far exceeding the average rate of growth of about 3% between these years. Now, to maintain this level of growth, China needs a lot of foreign investment to support its export base.
In order to be able to gain access to resources like coal and oil, both import and exporting nations need to open up their markets to foreign trade. Canada is a great exporter of goods to China and other Asian countries. In fact, Canada’s economy is largely built on the back of the exporters it depends on for its prosperity. Hence, if Canadian exporters feel that they are losing business due to the current global economic slowdown, at least until the tide changes, they would not hesitate to expand their business. And to do that, they need to partner with China’s trading nation.
Currently, the United States remains the largest exporter of goods to China. However, China has been pursuing a diversification strategy by investing more in other kinds of exports such as high-tech products and services, such as automobiles, airplanes, and ships. In addition to that, it also aims to become a major exporter of agricultural products. It is for these reasons that exporting goods to the United States can now be likened to a kind of back door to China. Indeed, by partnering with the fastest growing trading nation on earth, Canadians can greatly increase their exports and earn more money.