The US-China trade war has cost both countries billions so far. But new data GTR has seen shows this hasn’t been detrimental to the world’s largest trading nation.

The figures, compiled by China Investment Research, a UK-based firm owned by Grisons Peak focused on China, show that China’s trade outside of the US has more than made up for tit-for-tat tariffs slapped on goods from both parties this year.

As of the end of July, China’s bilateral trade with the UAE is up 16.1% (year-on-year), trade with Asean has grown by 11.3%, Europe by 10.8%, Russia by 9.8% and Africa by 3%, according to the source. So, while bilateral trade between the US and China is down 8.1%, China has found other players to fill its US-shaped trade gap.

President Xi Jinping aspires for bilateral trade between China and Asean countries to hit an eye-watering US$1tn as soon as next year, up from US$588bn in 2018. China’s president also wants 2020 trade volumes with Europe to reach US$751bn from US$670bn (2018) and Africa, US$400bn from US$205bn (2018).


Belt and Road? More like cards dealt and Chinese trade to explode

China has been quietly strengthening its partnerships with Asia, Africa, the Middle East, Latin America and Russia for some time now, making sure it doesn’t put all its eggs in a US-labelled basket.

The economic powerhouse surpassed the US as the world’s largest trading nation in 2013, the same year it officially launched its Belt and Road Initiative (BRI). Often described as a 21st century silk road, the BRI intends to build massive amounts of infrastructure connecting China to countries around the globe.

The ambitious programme looks to link Asia with Africa and Europe via land and maritime networks along six corridors, with the chief objectives to improve regional integration, increase trade and stimulate economic growth. When it was launched, 65 countries signed a BRI memorandum of understanding, with that figure now doubled to over 130.

Figure 1 shows that trade with BRI countries now represents nearly 30% of China’s total trade, with this figure increasing year-on-year by around 2% since 2016, according to China Investment Research. If growth continues at this rate, BRI trade will account for half of total Chinese trade in the next decade. But this could increase if more countries join the BRI.


Figure 1: BRI bilateral trade as % of China’s trade total

Lloyd Chan, economist at Oxford Economics tells GTR: “We recognise that the BRI markets offer China an alternative outlet to divert some of its trade away from the US. This could help to soften some of the negative effects from the trade conflict and lead to an increase in trade flows between China and the BRI economies.”

But Chan adds, the US is still an important player: “Nevertheless, the US is still a large and important market for Chinese exports and investments. Existing US tariffs on Chinese imports, which are unlikely to be lifted any time soon, will thus continue to put pressure on China’s exports and growth. Moreover, policy easing by the Chinese authorities to cope with the trade fallout has so far yielded limited impact on the domestic economy,” he adds.

Other BRI countries that President Xi Jinping hopes to increase trade volumes with include Russia, Saudi Arabia and the United Arab Emirates, see figure 2.


Figure 2: Chinese trade volume (US$bn)



Arguably, the BRI started way before its official rollout or title. “We believe it has accelerated much faster than China ever thought it would,” Henry Tillman, chairman of China Investment Research, tells GTR. “The first loan China gave to a now BRI country was in 1967, to Pakistan for US$60mn, and the second loan was for a Tanzanian railway. We then saw a proliferation of deals since the mid-2000s.”

China is also growing ties with countries that have not yet signed up to the BRI. Although Brazil has yet to ink an agreement, China is accelerating its imports of soybeans from Brazil – much to the dismay of US farmers. Chan adds on this: “China has also turned to other countries such as Brazil for agricultural commodities in order to circumvent US tariffs.” Other major countries in Latin America which have not yet signed are Mexico, Argentina and Colombia, although Colombia is in discussions to join.

Last year, China’s foreign trade reached a record high of Rmb30.51tn (US$4.3tn), and this year the General Administration of Customs (GAC), a government agency responsible for managing Chinese imports and exports, has said that as of the end of July, China’s trade volume rose 4.2% (year-on-year) to Rmb14.4tn (US$2.5tn). Of this, China’s trade with BRI countries amounted to Rmb5.03tn (US$700mn), up 10.2% (year-on-year) – thus 6% higher than the overall growth rate.