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How China and the U.S. Are Competing on Trade

Biden’s long-awaited meeting with Xi is a reminder of how most big economies are inextricably tied to both Washington and Beijing.

November 17, 2023, 4:48 PM

By Alexandra Sharp, the World Brief writer at Foreign Policy., and Olatunji Osho-Williams

An illustrations shows overlapping arrows and pie charts atop an image of container ships in an ocean seen from above.

China

As U.S. President Joe Biden met with Chinese President Xi Jinping on Wednesday in San Francisco, other leaders from around the world might have been waiting anxiously for signs that the two sides will calm tensions that have risen in recent years. Although there are several reasons to want a more stable U.S.-China relationship—more cooperation on climate change, for example, or fewer chances of a military misstep—the data shows how most big economies are largely reliant on steady trade with the world’s two top consumers.

Nearly half of all G-20 members rank China as their top destination for exports, from major economic powerhouses such as Japan and Saudi Arabia to regional blocs such as the African Union. Australia, Brazil, Indonesia, Russia, South Korea, and Japan each depend on China for around one-fifth of their outgoing trade.

Some of the data on trade dependencies might be a factor of geographical proximity. But members of the broader global south, including faraway countries across the African Union, still send nearly three times as many of their exports to China as they do to the United States. The data may also help explain China’s policy toward the so-called BRICS bloc, which Beijing aims to use as an alternative to Western-led financial institutions, specifically by touting the use of its yuan in global markets.

The value of Beijing’s total trade with G-20 nations is about half that of Washington’s, making up just $1.55 trillion as compared with the United States’ $2.92 trillion. Much of that is due to China’s emphasis on smaller export markets. The United States, on the other hand, dominates global trade through its immediate neighbors: More than three-fourths of Mexico’s and Canada’s exports go to the United States. Washington is also the top destination for exports from the largest economies in Europe and Asia—including India and China itself.

Beijing probably shouldn’t expect to find answers to its economic problems through trade. In a recent article for Foreign Policy, columnist Zongyuan Zoe Liu wrote, “Even if China could increase its service exports while maintaining its dominance in goods exports, there is only a narrow space for the exports-to-GDP ratio to rise as China’s GDP grows and supply chains relocate out of China.”