Earnings from direct exports to China exceed 5.6 bn euros

The volume of earnings from direct exports can be shown after deduction of the costs of imported goods and services which serve as inputs for these exports. This is because goods and services are often produced in cross-border value chains, with only part of the total revenue attributed to the Netherlands. This year, there are many disruptions in international value chains: the coronavirus crisis has (temporarily) interrupted production processes, while product demand has changed as well. The figures on export earnings over 2018 provide insight into the possible effects of such disruptions.

Exports can be broken down into three types: service exports, domestic exports and re-exports. Relative to 2015, earnings from the export of services to China declined slightly. The 22-percent increase is therefore entirely attributable to the export of goods. The bulk of the earnings is generated by the export of domestically manufactured products (73 percent). This is also the type of export which saw the steepest rise in earnings since 2015 (39 percent). Re-exports account for only a minor share (7 percent), with most of the products originating from Asia in the first place.

Highest earnings from direct exports in wholesale and machinery industry

If equally allocated, exports to China would earn every Dutch inhabitant approximately 325 euros from the above-mentioned 5.6 billion euros per year. However, not all industries benefit equally. The sectors with the highest earnings from direct exports to China are wholesale trade and the machinery industry with 960 million and 807 million euros respectively in 2018. For wholesale trade this share only represented 1 percent of its total export earnings in 2018, but for the machinery industry, China accounted for over 6 percent of its total export earnings, the highest share among all sectors; this was followed by the food industry with just over 3 percent on account of direct exports to China. The highest absolute increase relative to 2015 was seen in the machinery industry (414 million) and the food industry (157 million).

The fact that wholesale trade and commission trade were relatively more successful can be explained by two different factors. Firstly, wholesale trade features at many points in the value chain, for example in the sale of (sometimes previously imported) materials and the sale of various products such as pens, chairs, etc. (it often acts as an intermediary in transactions between small and large businesses). Secondly, the manufacturing sector for instance is broken down to a more detailed level than wholesale trade. The manufacturing sector as a whole earns more than 2 billion euros from direct exports to China, which is more than double the amount earned by wholesale trade.

Employment as a result of exports

Not only do exports generate additional value added and prosperity, they also create employment. Direct exports to China involved almost 51 thousand full-time jobs in 2018. This is comparable to the total number of jobs in publishing companies and in the film, radio and television industry in the Netherlands and corresponds to 0.7 percent of total employment in the country. With more than 15 thousand full-time jobs, manufacturing is clearly the industry with the highest employment related to exports to China. Within manufacturing, employment is highest in the machinery industry: over 5 thousand full-time jobs, i.e. more than 6 percent of total employment as a result of exports.

What about indirect exports?

So far, only direct exports have been discussed. These concern goods and services that are sent directly from the Netherlands to China. In addition, goods and services are supplied indirectly to China. For example, steel which is exported to Germany and processed in cars which then go to China. Approximately half of the total earnings from exports to China come from indirect exports. Would you like to have more information on indirect exports? Go to chapter 3 of the Internationalisation Monitor on China.