rade With China Is Becoming a One-Way Street
Trump is trying to further open up China’s market to U.S. companies as Beijing’s appetite for the rest of the world’s exports is diminishing
SINGAPORE—After the U.S. and China reached an agreement this past week to end the latest skirmish in their trade war, President Trump wrote on social media that he and Xi Jinping will “work closely together to open up China to American Trade.”
“This would be a great WIN for both countries!!!” he added.
The reality is that China is becoming less and less interested in other countries’ goods. Its imports are stagnant even as its exports soar, a result of sluggish consumption and Beijing’s all-out push to beef up domestic industries.
Chinese leader Xi’s effort to strengthen China’s fortresslike economy will make it harder for the U.S. and China to agree to a long-term trade deal that resolves ongoing tensions—especially one built around more Chinese purchases of American goods.
It is also fueling tensions with other countries that fear trade with Asia’s rising superpower is becoming one-directional.
“China’s vision of trade is exporting without importing,” said Brad Setser, senior fellow at the Council on Foreign Relations and a former Treasury Department official. China isn’t a realistic alternative to the U.S. as a market for global goods, he said.
Whether for cars, chemicals or commodities, Chinese demand for many of the exports other countries produce is flat or falling, even as its economy reports modest growth of around 5% a year.
In volume terms, which adjust for the effect of exchange rates, Chinese imports through March haven’t grown at all since the end of 2022—while exports have rocketed 33% higher, according to data from the Netherlands Bureau of Economic Policy Analysis, a Dutch research institute.
Such a lopsided relationship is largely the result of Xi’s policies, which have funneled investment toward factories while doing little to pep up sluggish consumer spending. The end of a real-estate boom, meanwhile, has reined in China’s ravenous demand for commodities.
Western brands from Swatch to Porsche to the luxury giant LVMH have reported weak sales in China as consumers keep a tight leash on spending.
Xi’s longer-term ambition is to ensure that China is self-sufficient in key technologies while dominating their supply abroad. He is moving close to that goal in fields including electric vehicles, batteries, construction machinery and medical devices.
Chinese companies say they are replacing overseas suppliers with China-based ones to “localize” their supply chains and push out imports—a trend given extra impetus by the trade conflict with the U.S. State-owned companies in some sectors have been ordered to replace foreign software in their IT systems by 2027, an initiative some refer to as “Delete A,” referring to Delete America.
China Harzone Industry, which makes emergency vehicles and equipment for civil and military use, said in an April 8 notice to investors about the impact of U.S. tariffs that it would “vigorously promote domestic substitution” for imported components.
Companies in the U.S., Europe and Japan say they are also seeing Chinese demand for their products wither as they battle intensifying competition from deep-pocketed Chinese rivals, many of whom are cutting prices aggressively in China in a battle for market share.
As recently as 2015, China imported some $70 million a year of railroad trucks, the wheel assemblies under railcars. In 2023, that had sunk to $1.4 million, according to Rhodium Group, a New York-based research group.
The German medical technology company Drägerwerk said sales of its ventilators and other medical products in China fell by half in 2024 compared with 2023, hurt by what it said were “buy local” policies by Chinese hospitals. The European Union recently pushed ahead with plans to impose curbs on imports of Chinese medical devices following an investigation of China’s healthcare procurement policies that it concluded discriminated against foreign companies.
“The general conditions for foreign companies in China are difficult,” said a Drägerwerk spokeswoman. The Chinese economy is struggling, she said, and competition is increasing because Chinese competitors are given preference in public tenders. The company intends to boost its own production in China in response.
Despite those trends, Xi has been seeking to cast China as the upholder of globalization now that Trump’s decision to jack up tariffs on U.S. trading partners has raised doubts about its future. Washington and Beijing agreed this past week to renew what had been a fraying trade truce to pave the way for further talks.
In a speech in March to Western executives, Xi said China is committed to “an open world economy,” and the defense of the current trading system based on the rules of the World Trade Organization, while deploring what he said was U.S. “bullying” and protectionism.
China’s sagging imports could complicate any further deal between Trump and Xi, especially if it revolves around buying more U.S. goods.
China in 2020 agreed to expand purchases of U.S. goods and services to around $500 billion over two years, but reaching such targets has proven difficult. An analysis by the Peterson Institute for International Economics found that China by the end of the two-year period had only imported around $300 billion, though that shortfall was partly explained by the disruption of the pandemic.
Typically, when countries export more and grow richer, they suck in more imports as consumer incomes rise and expanding export industries gobble up more parts and raw materials.
China was like that for years. The sharp slowdown in import growth more recently contrasts with trends in other developing Asian economies, where through March import volumes since 2022 have grown by around 11%. U.S. import volumes over the same period have risen around 36%, driven in part by a recent surge as consumers and companies raced to bring in products from overseas before tariffs came into effect.
China is still a major importer, pulling in some $2.6 trillion in 2024, compared with the U.S.’s $3.4 trillion. Its biggest import—and in Xi’s eyes, a source of vulnerability for China—was semiconductors, including those sold by such U.S. companies as Qualcomm. China also imports a lot of energy and food, benefiting U.S. companies such as the commodities giant Cargill and the gas exporter Cheniere Energy.
Even so, with booming exports, China’s trade in goods surplus worldwide last year hit about $1 trillion, nearly double its 2020 level.
China’s sagging import demand is especially painful for countries that once relied on selling cars, machinery and other high-value goods to its rapidly-growing economy.
Since the end of 2022 through May, Chinese imports in dollar terms from the U.S. were down 11%. Imports from Japan were down 17%, and German imports were down 18%.
Imports from big emerging economies and commodity producers such as Brazil and South Africa, which supplied the iron ore, copper and energy that China vacuumed up during its breakneck expansion, have also slowed, largely because of the bursting of China’s real-estate bubble.
Since the end of 2022, China has been subject to more than 250 antidumping and antisubsidy measures by countries alarmed by their widening trade gaps. Those include efforts to stem inflows of Chinese steel, aluminum foil, gloves and other products in such countries as Vietnam, Turkey, India and Brazil.
Beijing says it intends to take steps to fire up consumption, which should boost Chinese demand for energy and other imports if spending takes off.
But economists say Xi’s self-sufficiency push and determination to shield China from Western pressure by cutting out imports might limit any upside from those measures for global exporters.
“What China is offering predominantly is the opportunity to purchase Chinese goods,” with very limited opportunities to increase sales in its enormous domestic market, said George Magnus, a research associate at the University of Oxford’s China Center and a former UBS chief economist. “A champion of globalization wouldn’t have those features.”