China are behind global trade slowdown - Says World Bank

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The slump in Chinese growth and its nascent economic transition was the key factor in a sharp slowdown last year in global trade, the World Bank said.
Trade, as measured by total merchandise import volumes, rose only 1.7 percent in 2015, down from 3.0 percent in 2014, the Bank said in a new report.


That stall in trade, one of the key drivers of economic growth in recent years, was mostly due to cyclical shifts, especially the downturn in demand growth for commodities in emerging Asia and China.
But behind that slowdown is the beginning of China?s transformation from an export-driven economy to one rooted more in domestic consumption.
Trade flows should continue to be volatile over the coming years, the report said, greatly determined by the pace of China?s transformation.


?The rebalancing of the Chinese economy will influence trends in world trade. But how the transition happens will affect how much global trade fluctuates in the coming years,? it said.
The World Bank also said that the plunge in commodity prices that has ravaged the economies of many exporters is less a problem of lower Chinese imports than of oversupply.


?The fact that commodity exporters are seeing lower commodity prices rather than declining export volumes suggests that enhanced supply is an important factor-though expectations of lower future demand may also be playing a role.?
The report made no forecast for trade growth in 2016, but in recent weeks the International Monetary Fund has expressed strong concerns that global economic activity and trade continue to stall.
According to recent data from the CPB Netherlands Bureau for Economic Policy Analysis, trade growth by volume was flat in the last two months of last year.
Recent reports based on goods value show sharply slower overall trade in the United States and in China at the beginning of 2016.

On Tuesday IMF Deputy Managing Director David Lipton warned that rising worries over global growth and weak inflation ?is leading to a sharp retrenchment in global capital and trade flows.?
He urged advanced economies including China to act to boost demand.
?The downside risks are clearly much more pronounced than before, and the case for more forceful and concerted policy action, has become more compelling.?