China Increases Trade in Asia as U.S. Pushes Toward Decoupling

SINGAPORE—While the U.S. has sought to persuade countries to reduce their dependence on China, trade ties between the world’s second-largest economy and the rest of Asia are deepening as economies grow and companies refashion supply chains.

Behind the trend, economists say, are powerful economic forces that tend to bind smaller economies to bigger ones as well as China’s dominant role as a supplier of the kind of affordable goods that fast-growing countries need, such as cars and machinery.

But China’s growing trade with its Asian neighbors also reflects the ripples of the worsening spat between the world’s two largest economies that began with a fight over trade and has since widened to encompass technology, national security and foreign policy.

The trade battle that took off in 2018, along with subsequent pandemic disruptions, inaugurated a reordering of global supply chains. Manufacturers based in China have sought to shift some elements of their production lines to the country’s Asian neighbors, either to sidestep tariffs or insulate themselves from the risk of future upheavals as relations between the U.S. and China deteriorate.

That reshuffling, however, often served to enhance rather than reduce trade between China and other parts of Asia, data shows, reflecting the complex nature of manufacturing processes that commonly require dizzying numbers of components and several stages of assembly. Snapping together a smartphone in Vietnam or India, for instance, requires the manufacturer to move Chinese-made parts and basic materials within Asia before it is shipped off to its final customer.

U.S. Secretary of State Antony Blinken has spoken of giving countries a choice between the U.S. and China, rather than forcing them to choose.Photo: Ting Shen/Bloomberg News

The upshot is the U.S. will find it hard to nudge Asia away from China without more concrete steps to boost trade with its own huge domestic market. That means signing trade deals, joining regional trade pacts or taking other steps that would grant Asian economies much greater access to U.S. consumers, economists say.

“Within Asia the U.S. is facing a real uphill struggle,” said Rory Green, chief China economist and head of Asia research at consulting firm TS Lombard in London. “They are fighting economic gravity.”

China’s total trade—exports plus imports—with 10 of its neighbors in Southeast Asia, including Indonesia, Malaysia, Singapore and Vietnam, has grown 71% since July 2018, when the U.S. first placed tariffs on a range of Chinese goods, to $979 billion in the 12 months through November, according to a Wall Street Journal analysis of Chinese customs data.

Chinese trade with India grew 49% over the same period. The second-largest economy’s trade with the U.S. rose by 23% and with Europe by 29%, the Chinese data shows, highlighting how China’s trade with Asian economies easily outpaced that with other big markets.

U.S. trade with China has been pinched by tariffs, and China’s share of U.S. imports has fallen since 2018, though trade between the two countries nonetheless returned to growth during the pandemic as consumers splurged on electronics, homewares and other goods during long spells of working from home. A similar trend played out in Europe.

About the Author: Patriotman

Patriotman currently ekes out a survivalist lifestyle in a suburban northeastern state as best as he can. He has varied experience in political science, public policy, biological sciences, and higher education. Proudly Catholic and an Eagle Scout, he has no military experience and thus offers a relatable perspective for the average suburban prepper who is preparing for troubled times on the horizon with less than ideal teams and in less than ideal locations. Brushbeater Store Page: http://bit.ly/BrushbeaterStore