General

In 2022, China's foreign trade experienced the dual impact of the supply side and the demand side, and achieved a stable increase in volume and price. However, the changes in foreign economic and trade relations have revealed three different economic signals to China.

First, the European Union has replaced China as the largest source of imports from the United States.

Second, the United States has replaced China as India's largest trading partner.

Third, China and Russia have witnessed rapid economic and trade growth, and Russia has become China's tenth largest trading partner.

These three landmark events mean that the de-chinesization of the US global supply chain has accelerated its layout, the de-chinesization of US trade has also gradually accelerated, and the "decoupling" between China and the US is quietly underway.

1、 China's foreign economic and trade situation in 2022

According to the observation of Huacheng's import and export data, China's import and export commodities will reach 6.31 trillion US dollars in 2022. Among them, ASEAN (Association of Southeast Asian Nations) $975.3 billion, EU $847.3 billion, US $759.4 billion and Russia $190.3 billion. The United States is China's third largest importer and exporter.

In 2022, China's top ten trading partners (bilateral trade volume) are the United States, South Korea, Japan, Taiwan, China, Hong Kong, Vietnam, Germany, Australia, Malaysia, and Russia.

In terms of economies, China's largest trading partner is ASEAN, with a total trade value of 6.52 trillion yuan, an increase of 15%, accounting for 15.5% of China's foreign trade. The EU is China's second largest trading partner, and the trade volume between China and Europe reached 5.65 trillion yuan last year; China's third largest trading partner is the United States. Last year, Sino-US trade volume reached 5.05 trillion yuan, up only 3.7%.

2、 Behind the "new high" of Sino-US economic and trade, "decoupling" is quietly going on

According to Huacheng Import and Export Data Observation, the scale of international trade in the United States has reached a new high, and the bilateral trade between China and the United States has also exceeded the level before the trade friction. In 2022, the total volume of US goods trade was 5.4 trillion US dollars, up 16.3% year on year. Against the background of punitive tariffs and some politicians advocating "decoupling" between China and the United States, the United States exported US $153.8 billion to China, up 1.6% year on year; The United States imported US $536.8 billion from China, up 6.3% year on year. Sino-US economic and trade exchanges are quite resilient and play a "ballast stone" role in bilateral relations.

（1） The European Union has replaced China as the largest source of goods imports from the United States

With the rapid growth of imports from the United States, the largest source of imports has quietly changed to the European Union. In 2022, the growth rate of imports from the United States will continue to maintain double-digit growth. Imports from trade partners such as the North American Free Trade Area, ASEAN and the European Union will increase significantly, especially the growth rate of the European Union, ASEAN, Canada and Mexico will significantly exceed that of China. In 2022, the United States imported US $536.8 billion of products from China and US $553 billion from the EU. Although it has increased from 505 billion yuan in 2021, China has lost the largest source of imports from the United States.

（2） China's share of trade in the United States has gradually declined

In 2022, the bilateral trade between China and the United States will resume, and the import market share shows that the competitiveness of Chinese products in the United States market will decline relatively.

In 2022, the growth rate of imports from the United States will continue to maintain double-digit growth. Imports from trade partners such as the North American Free Trade Area, ASEAN and the European Union will increase significantly, especially the growth rate of the European Union, ASEAN, Canada and Mexico will significantly exceed that of China.

China's trade share in the United States has gradually declined, and the North American Free Trade Area, the European Union, ASEAN and other regions have obvious crowding-out effects on China.

In the total trade in goods in the United States, China's share fell from 14.8% in 2020 to 12.9% in 2022, and Canada's share rose from 13.9% in 2020 to 14.8%.

At the end of import trade in the United States, China's decline was more significant, from 21.4% in 2017 to 16.4% in 2022; Vietnam in ASEAN increased from 2.0% in 2017 to 3.9% in 2022. In the five years from 2017 to 2022, the share of China in the import end of the United States decreased by 5 percentage points, and Vietnam in ASEAN increased by 1.9 percentage points, indicating that the United States industrial chain is accelerating to move out of China.

（3） There are signs of "decoupling" in high-tech field and industrial chain

In 2022, the scale of high-tech products imported by the United States from China will decrease by 34.4% year on year, while the scale of high-tech products imported by the United States from non-Chinese markets will increase by 2% year on year. China's market share in the import of high-tech products from the United States also fell from 31.2% in 2021 to 22.6%, down 8.6 percentage points.

In terms of scale growth and market share, Sino-US high-tech products trade is worse than non-high-tech products and non-China market.

China's share of American-funded products and intermediate-trade products has decreased significantly, and the North American Free Trade Area, the European Union, ASEAN and other regions have increased their substitution for China's industrial chain. China's share in US capital goods and intermediate goods exports fell from 10.6% in 2020 to 9.3% in 2022, down 1.3 percentage points; China's share in the import of capital goods and intermediate goods from the United States fell from 17.6% in 2017 to 12.1% in 2022, down 5.5 percentage points, Huacheng Import and Export Data Observation reported.

In the industrial chain, the trade scale of capital goods and intermediate goods is an important way to participate in the international division of labor and the global industrial chain. China's share of American-funded products and intermediate trade products has declined significantly, indicating that the "decoupling" of the industrial chains between China and the United States is increasingly obvious.

There are signs of "decoupling" in the high-tech sector and industrial chain between China and the United States

3、 The United States replaced China as India's largest trading partner

According to the data of the Ministry of Commerce and Industry of India, in the fiscal year 2021-2022 (from April 1, 2021 to March 31, 2022), the United States officially replaced China as India's largest trading partner.

In 2022, the bilateral trade volume between India and the United States reached US $119.42 billion, higher than the bilateral trade volume with China of US $115.42 billion in the same period. Prior to that, in the fiscal year 2020-2021, China has been India's largest trading partner; In the fiscal year 2021-2022, the bilateral trade between China and India exceeded US $100 billion for the first time, but it was already lower than the US $119.42 billion bilateral trade between the United States and India.

According to Huacheng Import and Export Data Observation, the deficit between India and China in the 2021-2022 fiscal year surged from 44 billion in the previous fiscal year to 72.91 billion US dollars; India's trade surplus with the United States reached 32.8 billion US dollars, and the United States is one of the few countries with which India has a trade surplus.

India has undertaken part of China's industries, which is also very beneficial to India's economic and social development. As a result of Sino-US trade frictions, India imports a large number of intermediate products from China, and then exports them to European and American countries after processing.

4、 China and Russia have witnessed rapid economic and trade growth, and Russia has become China's tenth largest trading partner

In terms of scale, Sino-Russian trade volume is far lower than that of the United States and Europe. However, Sino-Russian trade has grown rapidly in recent years, and the bilateral trade volume has reached a new high. According to the data of the General Administration of Customs of China, in 2022, the Sino-Russian trade volume was US $190272 billion, up 29.3% year on year. Russia ranked 10th among China's largest foreign trade partners, up one place. China's total import and export value to Russia is 1.28 trillion yuan, accounting for 3% of China's total import and export value of foreign trade.

China-Russia relations are more reflected in complementarity, and the potential for cooperation between China and Russia is very great. It can be said that Russia's economic weakness is our strength, and our weakness is Russia's strength.

China mainly imports resources and energy from Russia. Russia's agricultural products, energy, timber and minerals are exported to China in large quantities, of which 70% are energy products. In recent years, Saudi Arabia and Russia have been the top two oil suppliers to China. In 2022, China imported 86.24 million tons of oil from Russia, amounting to 389.3 billion yuan, accounting for 50.75% of China's imports from Russia. At the same time, Russia is also one of the largest natural gas source countries in China. Huacheng Import and Export Data Observation Report.

China mainly exports industrial industries and high-tech products to Russia, such as clothing, toys, smart phones and accessories, home appliances, computers, cars, etc. In particular, the smart hands of Chinese brands, such as Xiaomi, OPPO, Huawei and VOVO, account for more than 50% of the market share in Russia.

5、 New Trends in China's Foreign Trade and Economic Cooperation

The international foreign trade in 2022 largely reflects the changes in the international environment, namely, the stagnation of globalization, the slowdown of global trade and investment, and the reshaping of the global industrial chain supply chain.

The United States is drawing its allies to decouple from China and is accelerating the reshaping of the global supply chain. The United States has transferred part of China's production capacity in the supply chain industry chain to the EU, ASEAN (Vietnam, Malaysia, Thailand, etc.), India, Mexico and other regions. Many enterprises in the EU, Japan and South Korea have already transferred their production capacity, and their investment in ASEAN has grown strongly.

The United States may pull or force its allies to transfer the low-end manufacturing industry to countries such as Southeast Asia, India, the European Union and Mexico with lower costs to reduce its dependence on China in the industrial chain.

In the high-tech field and high-end manufacturing industry, the United States directly uses its national power to intimidate and lure major enterprises around the world through technological blockade and industrial subsidies, so that the high-tech field and high-end manufacturing industry can return to the United States.

Even if Sino-US relations ease, the trend of the restructuring of the world's industrial chain and the return of manufacturing to the United States will continue. In the face of China's rise, western countries can't sit still. They don't want the cake to be taken away. Various kinds of crackdowns against China's manufacturing industry will continue to emerge.

Substantial breakthroughs are urgently needed in scientific and technological innovation and industrial upgrading

If China wants to achieve rejuvenation, it must make substantive breakthroughs in scientific and technological innovation and industrial upgrading. Innovation and breakthroughs in the high-tech field and high-end manufacturing industry will be the key to the sustained growth of foreign trade in the next few years and the stability of the industry.

China's economic recovery and development will inevitably require domestic consumption to play a "ballast stone" role before the new momentum of foreign trade is clear. However, to expand domestic demand and consumption, we should not only put leverage on the people, but also improve the income level of the people from the distribution system, so that the people dare to consume, are willing to consume and can consume.

This is a big test of national governance capacity and wealth distribution mechanism. Obtaining trust and support from enterprises, society and the public is the most important success factor.