Forecast for China. (Annual percentage changes unless specified)

Transcription

1 China Highlights Jitters in China's banking sector have hit again, with short-term lending rates spiking up and prompting the People's Bank of China (PBOC) to provide liquidity to the market. But the PBOC s communication strategy leaves something to be desired and there are more question marks over its ability to predict liquidity squeezes and control the banking sector, adding to the probability of further banking stress. As the Fed starts to taper its quantitative easing in January, a clear strategy from the PBOC is also needed to keep financial markets calm and liquidity well managed. With capital flight from emerging markets still on our watchlist of risks, we could see contagion to other markets. But the domestic economy continues to expand fairly strongly, with steady growth in industrial production, retail sales and new orders. We continue to expect growth of 7.3% in 214, after 7.6% in, and if the banking sector stresses are contained growth could surprise on the upside in the near term. Exports picked up in November, in line with the recovery in the US, but so far this is not providing a boost to the rest of Asia. Over the coming year, we will need to see more specific moves on reform to be sure that the agenda set out in the 3rd Plenum will be adhered to. There is a danger that growth in China will slip back into the more comfortable mode of heavy industry and investment-led expansion into the western provinces without enough focus on developing the service sector and moving up the value-added chain. Forecast for China (Annual percentage changes unless specified) Domestic Demand Private Consumption Fixed Investment Government Consumption Exports of Goods and Services Imports of Goods and Services GDP Manufacturing (value-added) Consumer Prices Current Balance (% of GDP) Government Budget (% of GDP) Current Account ($bn) Total Trade Balance ($bn) Short-Term Interest Rates (%) Exchange Rate (Per US$)

2 Special Focus Why does the hukou system matter for China? While over 5% of China s population lives in cities, only a third of the population has a hukou residency permit. These much sought-after permits give holders access to a wide range of social benefits and provides more educational opportunities for their children. At the 3rd Plenum and a recent conference on urbanisation, the government pledged to reform the controversial system but nothing has been implemented yet. Whether the government extends access to social services to more of China s large rural population is key to the rebalancing of the economy and to address rising inequality. But any reforms will need to be properly funded and include changes to how local governments are financed in order to be sustainable. Hukou system leads to divide between cities and countryside Some of the most important reforms announced at China s third Plenum of the Party Congress, surrounded the hukou system and the rights of rural residents. Over the past ten years, urban residents have enjoyed much faster income growth than rural residents. Urban households now have income levels over three times as high as rural households. Much of this has stemmed from high wage growth but, in addition, those with the much sought-after hukou have enjoyed access to a wide range of social benefits. Origins and purpose of the hukou system The hukou system has exacerbated the social and economic divide between cities and the countryside in China. While a system of family registration has its roots in Chinese history, the current hukou system of household registration was introduced in 1958 by the Communist Party as a means of social control. It allowed the party to control the movement of poor farmers to more prosperous urban areas, to ensure a supply of low cost labour to state-owned enterprises in different regions, and to restrict access to services by rural residents. People who worked outside their hukou place of registration were denied access to grain rations, employer-provided housing and health care. During the 198s, police could repatriate people back to their cities of residency. But the system evolved during the economic transformation of the 199s, and it was no longer strictly necessary to have a hukou in order to work in China s large cities. As a result, many rural migrants moved to China s big cities to work in industrial factories as part of China s manufacturing boom. But these migrants without a hukou in the city in which they lived and worked did not have the same access to social housing, education, pensions, health or other social services. Per capita disposable income Yuan billions Urban Rural Source : Oxford Economics/Haver Analytics Access to education and social pressures Some of these restrictions have been relaxed over time but many remain in place. Most migrants are now able to send their children to local primary schools in the larger 2

3 cities. But the crunch now hits as these children move to secondary school. Children of migrants do not necessarily have access to secondary schools in cities. In addition, entrance to the main universities is through exams in secondary schools in that city, with many more places available to local hukou residents. For example, it is much easier to go to Shanghai Jiaotong University if you have attended secondary school in Shanghai. So many migrants are forced to send their children back to their home towns to live with their grandparents or other relatives while at high school. This not only leads to a lot of dislocation from family and friends for these children of migrants, it also hampers their chances of getting into China s best universities and leads to lower job prospects. China: Government debt & trust assets RMB bn 25, 2, 15, 1, 5, Central Gov't Debt, LHS Local Gov't Debt, LHS, estimated for 211/12 Trust Company Assets, RHS Source : Oxford Economics/Haver Analytics Reforms to the hukou system RMB Bn 6,5 6, 5,5 5, 4,5 4, 3,5 3, There is growing pressure to change the hukou system, not least because of rising inequalities in China and from migrant workers in cities who have become successful in business but there are practical challenges. To extend the system of social benefits would require much more funding, and specifically from local governments. Nevertheless, it is crucial from the point of view of rebalancing of the economy. Household savings rates in China are in excess of 3%, partly as parents save in order to provide health, education and pensions services for themselves and their children. released at the conference promised to gradually allow migrant workers to become more integrated in cities, fully remove hukou restrictions in towns and small cities, and gradually ease restrictions in mid-sized cities. However, it emphasised that China should set reasonable requirements for rural residents to obtain hukou in large cities, and strictly control the size of population in megacities. This means that it could become even harder to obtain a hukou in the sought-after cities of Shanghai and Beijing. But it did highlight that effort should be made to make basic urban public services available for all permanent residents in cities and include all rural residents into the affordable housing system and the social security network. But the crux is how the rolling out of more social services to rural residents and smaller cities will be financed. Local government finances are already under strain and the last round of urban development led to rising local government debt. The Plenum called for a push to allow local authorities to expand financing channels for urban development through issuing bonds or other means but a more important development would be to allow local governments to raise taxes. At the urbanisation conference, it was announced that the taxation system for local authorities will be improved. Interestingly, it said that a mechanism will also be set up that links fiscal transfer payments from the central government with the pace at which farmers become urban residents. But so far, there have been no specific legislation or government announcements to implement these reforms. Whether we see any of these specific changes over the next year or two is a crucial test of the government s commitment to economic reform and to the rebalancing of the Chinese economy. It is also vital to address the rising social pressures and inequality, the burden of which is disproportionately placed on younger people. Without these reforms, the risk of widespread social tensions in China will rise. At the Plenum in November and more recently at a high level conference on urbanisation in mid-december, the government announced that a new hukou system will be set up to unify urban and rural registration. The document 3

4 Forecast Overview Liquidity squeeze again The People s Bank of China (PBOC) has again been forced to add short-term liquidity to calm interbank markets. These operations are only meant to be announced one month after the event but the PBOC chose to provide details on the same day through its Weibo account (a Chinese Twitter-equivalent). The seven-day repo rate had spiked to 1% earlier in the day, similar to levels seen in the June SHIBOR crisis as banks hoarded cash. Trading in the interbank market was also extended by 3 minutes. amid doubts over PBOC strategy The liquidity squeeze happened in part because the PBOC had not provided liquidity through open-market operations in the previous five trading sessions, which surprised the market. As in June, the crisis was in part caused by increases in liquidity demand at the end of the half-year as banks sought to meet regulatory requirements. On the upside, the PBOC did intervene before things got out of hand, but it adds to concerns about the PBOC s communication strategy and its ability to control the shadow banking sector. Economy still growing quite strongly But the domestic economy continues to grow fairly strongly. Industrial production, retail sales and new orders all showed steady growth in November. And exports picked up considerably in November, which is positive for the long-awaited recovery in world trade, though this appears mostly to be driven by stronger exports to the US and the Eurozone rather than to the rest of Asia. No more specifics on reforms Since the third Plenum on 9-12 November, there has been no announcement on who will form the Central Party Leading Group on comprehensively deepening reforms. It is unclear whether this is a worrying sign or whether there was never any intention of making the membership public. The Central Economic Work Conference did not announce a growth target for 214 but highlighted a focus on "guaranteeing food safety, reducing industrial overcapacity and containing local government debt. The latter is important given the delay in publishing the results from the Q3 audit on local government finance, and shows the importance of fiscal reforms to fund the rebalancing process. China: 3-month SHIBOR % Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Source: Haver Analytics China: Official PMI manufacturing 5+=above trend Source : National Bureau of Statistics China: Exports and imports % year Average since 25 Exports (US$) 3 month moving average Imports (US$) Source: China Customs 4

5 Steady growth in demand With investment contributing 4.3% points and consumption only 3.5% points to growth up to Q3, investment continues to be the most important component of China s economy. The key question is whether more of this investment is being driven by the private sector and, in particular, by the small- and medium-sized enterprises that generate the majority of China s employment. With the improved outlook for the domestic economy, we expect GDP growth of 7.3% in 214, after an estimated 7.6% in. But as China shifts towards more consumption and less-credit fuelled investment, growth will settle around 7.2% a year in There is a danger than the authorities step back from more difficult reform of the hukou system and the financial sector if complacency sets in or domestic obstacles are too large. Solid consumer spending outlook Growth over the next few years will be driven by consumption and state spending aimed at improving living standards and rebalancing the economy: A rising middle-class underpinning strong consumer spending the number of Chinese households with incomes over US$3, a year is set to increase nearly 2-fold over the coming decade. We expect consumer spending to outpace investment over the next five years as the government seeks to rebalance the economy. But consumption will also be affected as loan availability is reduced, with spending growth slowing below 8.5% in. However, spending should pick up in 214 as real wages rise and government policy helps to reassure consumers, facilitating a reduction in their precautionary savings. Over the medium term, consumption should rise as financial sector reform provides greater returns for households pensions and boosts household wealth. More stimulative fiscal policy spending on infrastructure and affordable housing and support for small businesses will continue to rise significantly. The government has announced US$15bn of infrastructure projects, which we expect to be implemented in and 214. Meanwhile, small companies with revenues below CNY2, a month are now exempt from VAT and turnover taxes. The government estimates that these companies generate 8% of urban employment and 6% of output. China: Regional house prices % Beijing -5 Shanghai -1 Guangzhou -15 Shenzhen Source : China National Bureau of Statistics China: Wealth management products (WMPs) % Spread of the average rate of return on WMPs over traditional savings accounts, LHS No of WMPs, RHS Source : Oxford Economics/CEIC China: Social financing* % of GDP % share accounted for by non-bank lending (RHS) Total social financing* (LHS) Units 4, 3,5 3, 2,5 2, 1,5 1, 5 5 * Sum of outstanding bank and other lending Source : CEIC %

6 Risk Assessment Economic risk rose marginally in. But if the tightening in banking regulation starts to bear fruit and growth in shadow banking is curtailed, China s economy will be more balanced and resilient in the medium term, and economic risks should subside from the current level. Domestic risks rose in, with rapidly rising property prices and capital outflows. With the recent increases in interbank rates, the risk of a shadow banking crisis in the near term has risen. Emerging risks A domestic financial crisis debt levels for regional governments, state-owned enterprises and the property sector have risen to nearly 15% of GDP. And the shadow banking sector has grown rapidly, possibly obscuring a higher level of non-performing loans. Although general government debt is low, a further worsening of the situation could lead to China s own debt crisis. There are some warning signs to watch out for: unsustainable growth in wealth management products, a sharp fall in property prices, or local governments failing to meet their funding requirements. Social stability corruption remains a significant problem and rising inequality places strains on social stability. With China at a critical stage of development, we expect political risks to rise in the near term before easing if financial liberalisation and social spending increase as we expect. Key risk scenarios Capital flows out of EMs emerging markets remain vulnerable to capital outflows, particularly in light of the tapering in quantitative easing by the US Fed that will begin in January 214. A wave of risk aversion could lead to further depreciation of currencies in EMs and rises in interest rates. In this scenario, China s property market slumps with knock-on effects for consumption and investment. And with exports hit by weaker demand from Asian neighbours and globally, growth in 214 might slow close to 4%. Eurozone slides into deflation with high levels of debt, deflation would carry high costs for the Eurozone. Weaker demand from China s most important trading partner and global risk aversion would push growth down to around 6% pa over the next couple of years. Risk index (=no risk, 1=highest risk) China World average Sovereign risk Trade credit risk Political risk Regulatory risk GDP growth CPI inflation Current account balance Government balance Government debt External debt Risk warnings Risk scenarios 6 Banking crisis could lead to sharp slowing in growth Inflationary pressures low with weak PPI inflation Export growth should pick up with global recovery Government deficit expected to remain below 3% of GDP Local government debt is high but central is low overall With over $3.5trn in reserves, China has a large cushion Impact of scenarios on risk index Maximum impact of scenarios on risk index % year Capital flows out of EMs Eurozone slides into deflation US consumer disappoints Golden age Impact of scenarios on GDP growth 4 Baseline Capital flows out of EMs 2 Eurozone slides into deflation Golden age Source : Oxford Economics 6

7 Long-Term Prospects Potential growth to slow to 7.1% Growth is set to slow over the coming decade as the economy rebalances. While credit-fuelled investment growth slows, the capital stock will make a much lower contribution to growth. In addition, the shift towards the service sector as the economy matures and becomes more consumer-oriented will lead to a slowing in productivity growth. China will also feel the effects of the one-child policy with the working age population starting to decline from 217. Increases in participation and continued urbanisation, however, will help to support the effective labour supply. The pace of productivity growth will still be strong by international standards, helped by: A shift to higher value-added sectors China is expected to consolidate its dominance in global ICT production. But it is losing its competitive edge in labourintensive sectors, leading investors to look to other countries in Asia for low-cost manufacturing. Continued financial sector reforms the central bank is looking into retail deposit insurance and a bankruptcy resolution scheme for banks as precursors to lifting the ceiling on deposit rates. Such a move, along with opening up the capital account, should help to boost financial wealth in China and give households more ways to save for their retirement, boosting consumption in the long run. China: Contributions to GDP % 18 year GDP Source: Oxford Economics Net exports Domestic demand F'cast Potential GDP and Its Components Average Percentage Growth Potential GDP* Labour Supply.6.4 Capital Stock Total Factor Productivity *ln(potential GDP)=.65*ln(Employment at NAIRU) +.35*ln(Capital Stock)+ln(Total Factor Productivity) Long-Term Forecast for China (Average annual percentage change unless otherwise stated) GDP Consumption Investment Government Consumption Exports of Goods and Services Imports of Goods and Services Unemployment (%) Consumer Prices Current Balance (% of GDP) Exchange Rate (vs US$) General Government Balance (% of GDP) Short-term Interest Rates (%) Working Population Labour Supply Participation Ratio Labour Productivity

8 Background Economic development China has transformed itself from a minor economy with little trade with the outside world in the 197s and early 198s to the world s largest exporter and second largest oil consumer, helped by structural reforms and entry to the WTO in 21. Only the US has a larger economy (US$16.2 trillion in 212 compared with US$8.2 trillion according to IMF estimates), and the gap between the two countries is even smaller on a PPP basis, which raises China s GDP to US$12.3 trillion. But with its population of 1.3bn, China is still a relatively poor country with an estimated GDP per capita on a PPP basis of US$9,55 in 212, similar to Jamaica and lower than Thailand but well ahead of India, so there is still huge potential to develop the consumer market. Income disparities have grown as urbanisation has boosted prospects in the cities, although even in Beijing and Shanghai average salaries are still well below rates in South Korea or Hong Kong. GDP growth has been remarkably strong and stable over the period of China s transformation, with the pace only dropping significantly below 8-1% during the difficult reforms of state-owned enterprises in the early 199s and then during the Asian crisis, when growth slowed to 6-8%. Stable growth was achieved during the Asian crisis through a surge in government-led investment, and the same approach was later used to counteract the 28-9 global financial crisis. High investment levels in China are supported by elevated household savings, which are estimated to be around 25-3% of average incomes. In part this reflects the need for precautionary savings in the face of low public spending on health, education and pensions, and the loss of iron rice bowl jobs for life. To raise consumption rates, the government has focused recent policies on boosting rural incomes and higher spending on health, including projects to provide basic medical insurance for at least 9% of the population. The government is also worried about rising inequality and has laid out a policy to increase the minimum wage to 4% of the urban average by 215. Financial sector reform to provide a greater range of savings instruments for household and corporates, together with the extension of land rights to rural areas so that land can be used as collateral, should also support the development of China s consumer market. Structure of the economy On the expenditure side, the economy is dominated by investment, which accounts for around 45% of GDP (in nominal terms). This reflects the rapid industrialisation of the economy, which has also led to an expansion of the urban population and a construction boom around 5% of Chinese now live in urban areas, compared with 36% in 2. Much of the investment has been undertaken by State Owned Enterprises (SOEs), which contribute around a third of total investment. In 211, agriculture (including fishing) accounted for just 8% of GDP (gross value added), and construction a further 7% (up from just over 5% in the early 2s). The contribution from manufacturing also increased to 34%, compared with 31% in 2. The remaining 51% of GDP came from services, mining and utilities. The overall value of industrial production in 211 was CNY14.8 trillion at 25 prices. Within this, the largest sectors were iron & steel (7.3%), utilities (over 6%) and food (4.8%). By 216 industrial production will total CNY21.5 trillion (at 25 prices), rising to almost CNY3 trillion by 221. The largest sectors in 221 will be iron & steel (6.6%), utilities (6.5%) and telecommunication equipment (5%). Balance of payments and structure of trade China is a very open economy with just over a quarter of GDP exported. Exports are dominated by manufactured goods, particularly ICT equipment, industrial machinery, clothing and other textiles. Although the country is 8

9 achieving strong growth in higher-value exports such as ICT equipment, the share of value added is relatively low because overseas manufacturers use cheaper Chinese labour to assemble imported components it is estimated that domestic value added in Chinese exports is around 7% (falling to 5% for hi-tech exports) which compares unfavourably with 87% for Japanese exports. The main markets for Chinese exports are the EU and US, which each account for just under 2% of merchandise exports (the actual figure is probably slightly higher as 14% of Chinese exports go to Hong Kong, mainly for re-export elsewhere). Strong export growth over the past two decades has been helped by reforms such as the unification of the currency rates and liberalisation of the current account in the early 199s. The current account surplus widened to around 1% of GDP in 27, leading to concerns that the currency was severely undervalued. In 25, China began a gradual appreciation of the renminbi against the US dollar but this was suspended at the end of 28 when the global financial crisis hit. In March 21, the governor of the People s Bank of China referred to recent exchange rate stability as a special policy during a special period. However, the authorities concerns about domestic overheating and the ability to pursue an effective monetary policy were always likely to prompt a return to the policy of gradual appreciation, and the central bank signalled this in June 21. The exchange rate has gradually risen since then. The current account surplus now stands at around 3% of GDP and the exchange rate no longer appears to be significantly undervalued. During nearly 2 years of current account surpluses, China has accumulated almost US$3.5 trillion of foreign exchange reserves, equivalent to nearly 19 months import cover. It is now the largest holder of US Treasuries and has acquired substantial influence on global capital markets. Increasingly China is looking to diversify its reserve holdings via the China Investment Corp, its sovereign wealth fund. Policy The government s economic policy is defined by five-year economic plans. The 12th plan, which runs from 212 to 217, sets the objective of addressing rising inequality and creating an environment for more sustainable growth by prioritising more equitable wealth distribution, increased domestic consumption and improved social infrastructure and social safety nets. This is intended to be the first step in a longer-term rebalancing from investment- and exportled growth towards consumption. The authorities also want to close the gap between rural and urban incomes and have set targets for affordable housing and improvements in health and education services. The next five-year plan will be announced in 215; it is expected to continue the rebalancing through financial sector reform and policies to encourage domestic entrepreneurship, as well as furthering reforms of the health, education and social security. The authorities use monetary policy to manage inflation risks and asset prices (such as the threat of property sector overheating in ). There has typically been less focus on adjusting policy interest rates than in other economies, with adjustments to banks minimum reserve requirements used to control credit growth. Chinese authorities also employ more direct means to achieve their objectives by setting lending targets for banks, which are easier to achieve when around 6% of lending is made by state-controlled banks. Politics China experienced a smooth transition of leadership with Mr Xi taking over as President in March, having already assumed the roles of leader of the Communist Party and Chairman of the Military. New members of the Politburo Standing Committee were also appointed in November 212. The Committee can be described as fairly conservative in nature and appears to be firmly in support of Mr Xi. The leadership change does not suggest a shift in the direction of economic policy and we will have to wait until the next five-year plan to see how the authorities will rebalance the economy and reform key areas such as the financial sector. In the short term, policy is focused on tackling corruption among public officials, which has created the perception among the population that officials live lavishly while the masses toil. 9

10 Data & Forecasts Key Indicators: China Percentage changes on a year earlier unless otherwise stated Industrial CPI Food RPI Exports Imports Trade Retail value Prices US$ % US$ % balance sales added (US$ mn) Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Financial Indicators: China Percentage changes on a year earlier unless otherwise stated Loans RMB Exchange Exchange Exchange Share Reserves Imports rate Loans rate rate rate price Cover % Yuan/ avg. Yuan/$ avg. Yuan/1Yen Shanghai A US$ Bn Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

11 CHINA TABLE 1 SUMMARY ITEMS Annual Percentage Changes, Unless Otherwise Specified CONSUMERS TOTAL FINAL TOTAL GROSS INDUSTRIAL TOTAL AVERAGE WHOLE COMPETIT- CONSUMER RETAIL EXPEND- EXPENDITURE FIXED DOMESTIC PRODUCTION EMPLOYMENT EARNINGS ECONOMY IVENESS PRICE PRICE ITURE INVESTMENT PRODUCT (GROSS) PRODUCTIVITY (28=1) INDEX INDEX (C) (TFE) (IF) (GDP) (IPVA) (ET) (ER) (GDP/ET) (WCR) (CPI) (RPI) YEARS BEGINNING Q I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV COPYRIGHT (C), OXFORD ECONOMICS CHINA TABLE 2 SUMMARY TABLE TRADE CURRENT CURRENT GOVT. GOVT. SHORT TERM SPREAD OVER REAL EQUILIBRIUM DOLLAR BALANCE ACCOUNT ACCOUNT FINANCIAL FINANCIAL INTEREST US SHORT INTEREST EXCHANGE RATE EXCHANGE (US$ BN) (US$ BN) (% OF GDP) DEFICIT DEFICIT RATE TERM RATE RATE PER US RATE (YUAN BN) (% OF GDP) (%) DOLLAR (BVI$/ (BCU$/ (BCU$*1 (-GB) (-GB*1 (RSH) (RSH-RSH US) (Note 2) (RXEQUIL) (RXD) YEARS BEGINNING Q I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV Note 2 : REAL INTEREST RATES = Nominal interest rate (RWL or RSV) - % change in CPI COPYRIGHT (C), OXFORD ECONOMICS 11

12 Long-Term Forecast for China Annual percentage changes unless otherwise specified GDP Consumption Investment Government Consumption Exports of Goods and Services Imports of Goods and Services Unemployment (%) Consumer Prices Current Balance (% of GDP) Exchange Rate (per $) General Government Balance (% of GDP) Short-term Interest Rates (%) Working Population Labour Supply Participation Ratio (%) Labour productivity Employment Output gap (% of potential GDP)

13 Key Facts Politics Head of state: President XI Jinping Head of government: Premier LI Keqiang Political system: Communist state Date of next presidential election: 223 Date of next legislative election: 218 Currency: Yuan (CNY) also called Renminbi (RMB) Long-term economic & social development * GDP per capita (US$) Inflation (%) Population (mn) Urban population (% of total) Life expectancy (years) Source : Oxford Economics & World Bank Structure of GDP by output * 212 or latest 211 available year Agriculture 1.% Source : CIA Factbook Industry 46.6% Location : Eastern Asia, bordering the East China Sea, Korea Bay, Services 43.3% Yellow Sea and South China Sea, between North Korea and Vietnam Source : World Bank (CIA Factbook) Long-term sovereign credit ratings & outlook Corruption perceptions index 212 Foreign currency Local currency Score Fitch A+ (Stable) A+ (Stable) Developed economies (average) 43.2 Moody's Aa3 (Stable) Aa3 (Stable) Emerging economies (average) 74.8 S&P AA- (Stable) AA- (Stable) China 39. Emerging Asia 38. Structural economic indicators * Current account (US$ billion) Trade balance (US$ billion) FDI (US$ billion) Debt service (US$ billion) Debt service (% of exports) External debt (% of GDP) Oil production ( bpd) Oil consumption ( bpd) Source : Oxford Economics / World Bank / EIA Destination of goods' exports (212) United States 17.2% European Union (27) 16.3% Hong Kong, China 15.8% Japan 7.4% Korea, Republic of 4.3% Source : WTO Source: Transparency International Scoring system 1 = highly clean, = highly corrupt Source : WTO Composition of goods & services exports, 212 Manufactures 86.% Other goods exports.1% Transportation 1.7% Travel 2.2% Fuels and mining products 2.5% Other commercial services 4.5% Agricultural products 3.% 13