It takes two economies to de-couple.
The process is often framed from the US side, where Washington reduces its industrial reliance on the Chinese economy in strategic sectors ranging from steel to critical minerals to technological inputs. But the decoupling process is also playing out for China, which is tasked with finding a replacement for its most important export market and insulating its broader economy from a widening array of US restrictions. With this in mind, in anticipation of renewed US-China tensions under President Donald Trump’s second term, Beijing has been proactively implementing several strategies to fortify its economy. These strategies include:
- Diversifying international trade partnerships to reduce dependency on the US market. The Trump tariffs will inevitably raise the price of Chinese exports in the critical US market. In response, Beijing is looking elsewhere for trade-driven growth. ASEAN became China’s largest trading partner in 2024, with total trade exceeding $797.63 billion, representing a $190.7 billion surplus. The EU follows with $762 billion in bilateral trade and a $247.2 billion surplus. Trade with Russia surged in 2023, with exports increasing nearly 47%, reaching $237 billion in 2024. China also expanded its presence in Latin America, where trade flows reached $450 billion, and in December 2024, it eliminated tariffs on goods from least developed countries, benefiting 33 African nations as well as Afghanistan, Bangladesh, and Myanmar. This diversification drive has been largely successful when viewed holistically. In 2024, China’s total trade reached a record high, with exports growing 5.9% to $3.58 trillion and imports increasing 1.1% to $2.59 trillion, resulting in a record trade surplus of $992.16 billion. Yet critically, this was achieved alongside a decreasing share of exports to the United States – a trend that has been evident since the first round of the trade war in 2018.
