China versus America on global trade

The return of President Donald Trump to the White House means another trade war between the United States and China looks increasingly likely, with the rest of the world caught in the crossfire.

But a new Lowy Institute Data Snapshot — mapping international trade relationships with the world’s two largest economies — reveals China’s lead over the United States has only widened since the first Trump presidency.

In 2001, some 80 per cent of economies worldwide did more two-way trade with the United States than with China. Just over 20 years later, the newly published Data Snapshot reveals an almost complete reversal of global trade relationships: around 70 per cent of economies worldwide now trade more with China than they do with the United States.

China has not only widened its global trade partnerships but also deepened them. More than half of all economies now trade twice as much with China compared to the United States.

“It is no secret what’s behind China’s increasingly deep trade relationships: a big jump in exports,” write the report’s authors Roland Rajah and Ahmed Albayrak.

“Increasingly strident actions by the United States and others have still done little to stop China’s export juggernaut. But a much bigger assault is coming.”

Rajah and Albayrak argue the impact of tariffs on trading relationships and US–China economic competition is complex.

“In one sense, tariffs have strengthened America’s importance as an export destination. In another sense, the tariffs also mean China is exporting more to other economies, both as alternative markets and as an indirect way of exporting to the United States.”

KEY FINDINGS

• China’s lead over the United States in international trade relationships has only widened since the last US–China trade war of 2018–19.
• Around 70 per cent of economies trade more with China than they do with America, and more than half of all economies now trade twice as much with China compared to the United States.
• China’s global trade relationships remain deeply unbalanced, with a trillion-dollar surge in China’s merchandise exports since the pandemic, while its imports have not kept pace.

The full Lowy Institute Data Snapshot, China versus America on global trade, is available to read and download now.

MEDIA CONTACT
Andrew Griffits
Head of Media and Communications
media@lowyinstitute.org