China's foreign trade with other BRICS countries increased by 19.1 percent in the first seven months of 2023, accounting for 10.1 percent of China's total foreign trade value during that period.
China has a complex network of trade partnerships with over 200 countries, regions, and territories, and it has a trade surplus with the majority of them, including the US and India, while having deficits with major Asian economies like Taiwan, Japan, and South Korea. These trade relationships are influenced by historical, geopolitical, and strategic factors.
Even as the United States tries to reduce its reliance on Chinese goods, research suggests that global supply chains remain deeply interconnected, with Chinese products making their way into America through other countries. Changes in trade relationships and supply chains have caused China's share of US imports to decline, but countries like Vietnam and Mexico have seen an increase in imports from China, indicating that Chinese firms are still heavily involved in the supply chains. This reshuffling of supply chains has led to higher prices for goods and calls into question whether the US has truly lessened its dependence on China.
The US is importing fewer goods from China, with Chinese imports making up the lowest share since 2006, as supply chains shift to countries like Mexico and Vietnam.
The emergence of a new era of Asian commerce is reshaping the continent's economic and political future, with greater regional trade, increased capital flows, and a shift towards intra-Asian investment and supply chains. This trend is driven by the growth of sophisticated supply chains, foreign direct investment, cross-border banking, and the Belt and Road Initiative, as well as the need to establish new supply chains and the rise of Asian savings and demography. The integration of Asian economies will have political ramifications, with a decline in America's economic importance and a more locally focused and less Western-facing continent.
China sees Southeast Asia as geopolitically important and will prioritize investments in the region to counter U.S. influence, despite slowing domestic growth, according to economists. Additionally, Southeast Asia is a crucial source of critical minerals for China's green technology and electric vehicle ambitions.
Asian equities trade higher amid light volume due to holidays in China and India, with investors digesting economic data and awaiting US PMI data later in the day.
China is increasing its wheat imports to record levels following damage to its domestic crop, as it seeks to secure cheap supplies after heavy rains; the country's growing appetite for wheat adds uncertainty to supply chains already vulnerable to war and protectionist trade policies.
Chinese investment in Thailand has increased this year, despite an economic slowdown in China, with Chinese firms committing nearly three times more than the previous year, making Thailand a vital investment hub and boosting ties between the two countries.
