Could China overtake US as global trader?

The United States is still the world's biggest importer, but China is gaining. It was a bigger market than the United States for 77 countries in 2011, up from 20 in 2000, according to the AP analysis.

The AP is using International Monetary Fund data to measure the importance of trade with China for some 180 countries and track how it changes over time. The analysis divides a nation's trade with China by its gross domestic product.

The story that emerges is of China's breakneck rise, rather than of a U.S. decline. In 2002, trade with China was 3 percent of a country's GDP on average, compared with 8.7 percent with the U.S. But China caught up, and surged ahead in 2008. Last year, trade with China averaged 12.4 percent of GDP for other countries, higher than that with America at any time in the last 30 years.

Of course, not all trade is equal. China's trade is mostly low-end goods and commodities, while the U.S. competes at the upper end of the market.

Also, even though Chinese companies invest abroad and employ thousands of foreign workers, they lag behind American industry in building global alliances and in innovation, which is still rewarded in the marketplace. China's competitive edge remains low labor and other costs, while the U.S. is the world's center for innovation in autos, aerospace, computers, medicine, munitions, finance and pharmaceuticals. The Chinese have yet to build a car that will pass U.S. or European emission standards.

And the United States still does more trade overall — but just barely. If the trend continues, China will push past the U.S. this year, a remarkable feat for a country so poor 30 years ago that the average person had never talked on a telephone.

"The center of gravity of the world economy has moved to the east," said Mauricio Cardenas, the finance minister in Colombia. Like most of Latin America, his country is still more closely tied to the U.S., but its trade with China has risen from virtually nothing to 2.5 percent of GDP, a more than tenfold increase since 2001. "I would say that there is nothing comparable in the last 50 years."

In one sense, China's growing presence in trade is just restoring the Middle Kingdom to its historic dominance. China was the biggest economy for centuries until about 1800, when the industrial revolution propelled first Europe and then the U.S. into the lead.

China began its return to the global stage in the 1990s as a manufacturer of low-priced goods, from T-shirts to toys. Factories in other countries slashed costs to meet the "China price" or were pushed out of the market.

As the new millennium dawned, the U.S. remained by far the world's dominant trader, rivaled collectively by Europe but no single nation. However, from 2000 to 2008, China's imports grew 403 percent and exports 474 percent, driven in part by its entrance into the World Trade Organization and its move to higher-value production.

China's imports of oil and raw materials for its factories propelled resource booms in parts of Asia, Africa and Latin America. China's demand for steel for manufacturing and construction grew so fast that its mills now consume half the world's output of iron ore.

Zambia, a major copper producer, switched to the China column in 2000. Australia, a coal and iron ore exporter, followed in 2005. Chile, another copper supplier, moved in 2009.

Meanwhile, exports surged as Apple, Samsung, Nokia and other electronics giants shifted final assembly to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China's column in 2003, followed by Malaysia in 2007.

Previous

1 | 2 | 3 | 4 | 5

Next