China is South Africa’s largest single country trading partner. In the past few weeks we have seen significant volatility in the Chinese stock markets as well as a devaluation of their currency. This has impacted on China’s main trading partners as well as emerging market* currencies and equities (shares) in particular.
The graph below shows the important role that China now plays in the global economy.
• In 2000, only 5 countries named China as their largest export market; 53 countries named the US as their biggest export market.
• By 2014, 43 countries regarded China as their major export partner; 31 countries named the US as their biggest export market.
It stands to reason that as China is one of the world’s biggest importers, an economic slump in China will have a negative effect on countries it does business with, particularly commodity producers (such as SA).
*SA is classified as an emerging market.
Source: Business Insider / Cannon Asset Managers