US–PRC trade at a record high, but decoupling looms

context: As the development of the Ukraine-Russia conflict adds pressure on Beijing and the next US presidential election approaches, it is likely that further efforts to target the PRC by the US may occur, adding more instability and unpredictability to the situation.

Trade numbers from 2022 appear to show an improvement in US–PRC trade to above pre-trade conflict levels, say Ni Shuhui 倪淑慧 and Cui Xiaomin 崔晓敏 CASS (Chinese Academy of Social Sciences) Institute of World Economics and Politics researchers, noting the growth is mainly a result of rising prices in the US.

US trade numbers, they say, indicate

  • the value of bilateral trade increased 5.2 percent year-on-year
  • significant growth in pharmaceuticals and organic chemicals
  • growth in US imports from the PRC mainly in chemical and some electromechanical products
  • growth in US exports to the PRC in agricultural products, textiles and chemical products

After a closer assessment of the statistics, they argue that the effects of decoupling are both evident and continuing, particularly in some sectors:

  • the proportion of PRC’s share in the total trade of goods in the US dropped (14.8 percent in 2020 to 12.9 percent in 2022), while trade with ‘friend-shoring’ allies raised markedly
  • high-tech goods -  US imports from PRC dropped 34.4 percent compared to 2021, while total imports of high-tech goods increased by 2 percent
  • supply chain - the proportion of PRC goods in US capital goods and intermediary goods imports continues to drop (from 17.6 percent  in 2020 to 12.1 percent  2022).

In response to the decoupling trend, the PRC must continue to improve bilateral trade relations and cooperation with allies to create space for its domestic industry to transform and upgrade its supply chains, they say.