Trump's tariffs were at least partly aimed at weakening China's position in global trade while strengthening America's, yet the opposite is happening.
https://x.com/RnaudBertrand/status/1990238460847001635
Quite extraordinary when you think about it: Trump's tariffs were at least partly aimed at weakening China's position in global trade while strengthening America's, yet the opposite is happening.
As per Oxford Economics' latest forecast, China's real goods exports will grow by an impressive 8.3% in 2025 before stabilizing at roughly flat growth in 2026 (among an overall reduction of global trade). By contrast they project U.S. exports to collapse by -3.4% in 2026.
It's pretty insane: the net result of all the "trade deals" that Trump keeps boasting about, and the 100s of billions of dollars of US products that various countries allegedly promise to buy is... a projected collapse of US exports! So much for trade wars being "easy to win"...
So why are China's exports holding up so well? You can read the full study (oxfordeconomics.com/resource/why-h) but the most interesting reason that they advance in my view is this role reversal: China used to import parts and assemble them into finished goods, but now China produces the parts that everyone else imports and assembles.
In other words China is increasingly letting the rest of the world be the China of the early 2010s - doing the final assembly work - while it has moved upstream to take over the role of its erstwhile (mostly Western and advanced Asian economies) suppliers, the producers of higher-value intermediate goods.
We've often asked the question: "who is the next China?" Well, the answer increasingly is "the rest of the world" - because China is displacing the West in higher-value intermediate goods production.
It's a fascinating shift: in the space of 1 or 2 decades we'll have effectively gone from China being the factory of the world, to something more like the world being the factory of China in the sense that other countries assemble products from Chinese-made parts and components.
posted by Satish Sharma at
13:56
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