The bilateral commerce in products between the United States and China reached a record high in 2022 despite the escalating political tensions between the two nations. According to data from the US Bureau of Economic Analysis, bilateral commerce in goods increased to $690.6 billion, with $153.8 billion in exports to China and $536.8 billion in imports of Chinese goods. Exports to China increased by $2.4 billion to reach $153.8 billion. The previous high point for bilateral trade in goods was $658.8 billion in 2018.
According to commentators, the concept of “decoupling,” or lessening mutual reliance between the two countries in a variety of areas, seems to be much more apparent in policy talks in Washington than in real trading practices. Especially those connected to China, supply chains are sticky, according to Nick Marro, Lead Analyst for Global Trade at the Economist Intelligence Unit. “The US government is striving to lessen its reliance on China in its supply chain, but at the end of the day, most businesses worry more about getting their products to customers on time and in the most economical manner for their operations.”
Political tensions between the two nations have risen despite their close economic links. In reaction to a suspected Chinese spy balloon floating above the United States last week, US Secretary of State Antony Blinken postponed a scheduled trip to China, ushering in a significant new stage in the escalating tensions between the two countries.
Last year, China’s GDP grew by just 3%, which was one of the poorest results in close to 50 years. Growth was significantly hampered by months of widespread Covid lockdowns and an unprecedented decline in the housing market. Beijing has stepped up its diplomacy with Western nations in an effort to regain lost ground and normalize relations.
The Trump administration began imposing tens of billions of dollars in tariffs on China in 2018, and instead of reversing those actions, US President Joe Biden has subtly escalated the trade spat. His government put in place extensive new restrictions in October 2022 to cut off China’s access to technology that is essential to its burgeoning military might. In response to reports that the Netherlands, Japan, and the United States have joined the United States in restricting sales of some computer chip machinery to China, a Dutch manufacturer of semiconductor equipment, ASML, stated last month that “rules are being finalized” on export controls to that country. In addition, a number of media publications stated that Washington is taking steps to limit the sales of American technology to Huawei, a major Chinese technology company.
In spite of these initiatives to limit technology exports to China, trade between the US and China keeps growing. The latest record high in bilateral goods trade, which rose to $690.6 billion in 2022, refutes claims that the two countries are “decoupling” from one another. According to analysts, this is because supply chains are very hard to break and businesses are more concerned with cost-effectiveness and promptly satisfying customer expectations.
Despite the fact that the US government has taken steps to lessen its reliance on China, including imposing tariffs and limiting technology exports, these actions have not significantly affected global commerce. In actuality, while imports of Chinese goods have climbed by $31.8 billion, exports to China have increased by $2.4 billion.
As a result of a recent incident with a suspected Chinese spy balloon, US Secretary of State Antony Blinken had to postpone a trip to China due to the rising tensions between the US and China. The reality of trade between the two countries implies that the concept of “decoupling” is essentially a policy discussion in Washington rather than a reflection of actual trade practices, notwithstanding these increased political tensions.
China has been attempting to strengthen its diplomatic ties with Western nations in an effort to stabilize its economy and make up for lost ground after barely 3% economic growth the previous year. But under President Joe Biden, US efforts to limit the export of vital technology to China have only gotten stronger. Nevertheless, trade between the US and China continues to reach new heights, despite these efforts to curb the relationship.