China accounts for almost a quarter of the value of worldwide imports of manufactured goods. That is significantly more than any other country. Germany, by contrast, accounts for about 8%, the US 7% and Japan about 5%. The European Union and the United Kingdom account for about the same amount as China, but almost two thirds of this trade is between countries within the bloc. While China’s weight in the world economy has increased, this increase has been uneven and the dependence on China varies significantly across economies.
Trade Dependence on China Varies Significantly Across Economies
The importance of China as an origin of the import of goods varies substantially across economies, but as a rule the US and Europe are less dependent on China than Asia, South America, and Africa. While Chinese influence in the Pacific has been a contentious topic over the past years this is not necessarily reflected in dependence on China as the primary source of imports.
Figure 1 provides a graphical overview of the China share of manufactured imports by country. For most of Asia Pacific, East and West Africa and South America, China accounts for more than 30% of the value of imports. India draws about 32% of its imports from China while Japan, Vietnam, Australia, and South Korea are all around 40%. Note that we have excluded fuels, chemicals, food products and other raw materials from our analysis as this tends to skew the numbers.
In the case of Europe, about two thirds of imports come from other European Countries and in the case of the United States, NAFTA partners Mexico and Canada are almost as important as China and together accounted for about 23% of imports in 2021. Intra-regional trade is almost always more important than intercontinental trade. The same picture emerges within the Asia, where trade is more focused on China than with the Europe or North America.
China has Become More Important in Most but Not All Places
Overall, the China share of world imports have increased from about 18% in 2011 to 23% in 2021. The table below provides an overview of the countries with increasing and decreasing import dependence on China. Most countries – with the exception of the US, Japan and France show an increase or at least a degree of stability over the last 10 years.
Pacific Islands Imports from China Have Increased Particularly in the Solomon Islands
China’s increased geopolitical influence in the Pacific region is not necessarily reflected in trade data on a regional level, but there are some interesting developments on a country level. On a regional level the China share of imports has increased from about 14% to 18%, which is pretty much in line with the increase in China dependence elsewhere. However, Chinese imports into the Solomon Islands increased from 11% in 2011 to about 49% in 2021. In most other places the China share has remained flat.
The Shift Away from China to Southeast Asia is Overstated
An emerging shift away from China to the benefit of Southeast Asia is not supported by the data, but Southeast Asia as a region has increased its share of world imports from about 7% in 2011 to 10% in 2021.
On micro (i.e. company level) the emergence of a China Plus One strategy has seen diversification of supply chains in order to reduce dependency on China, usually to the benefit of countries in Southeast Asia such as Vietnam, Cambodia and to a degree Thailand, Indonesia and Malaysia. Much of the discussion has been around labour intensive industries such as textiles and apparel.
While trade from countries such as Vietnam to the United States and Europe has grown strongly, the data provides very little evidence of an overall global shift away from China taking place. The US did increase their share of imports from Southeast Asia from 10% to 16% in the space of three years between 2018 and 2021. The share Southeast Asia as a source of European imports, on the other hand, has stayed fairly constant at around 3%.
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