“Amid all the noises on de-coupling and de-globalization, somewhat unexpectedly, the pandemic has deepened the ties between China and the rest of the world,” wrote Larry Hu, chief China economist for Macquarie Capital, in a research report.
“After having recovered from its own Covid-19 crisis, China was open for business when the pandemic triggered huge demand in the US (and other countries) for Covid-19 related goods,” Kuijs said.
China’s trade relationship with the United States, meanwhile, became even more imbalanced: Beijing’s trade surplus with Washington rose to $317 billion in 2020, a 7% increase from the year prior and the second highest amount on record, according to Iris Pang, chief economist for Greater China at ING. The amount is just $7 billion shy of 2018 levels, when Trump launched a blistering trade war to right what he called a lopsided relationship with the world’s second largest economy.
“Judged by the surge of US imports from China in 2020, it seems fair to say that Trump’s trade war with the country failed,” Kuijs said.
“As [China] plays a critical role in many supply chains and remains a fundamentally very competitive place to produce, it is much easier said than done to ‘decouple’ from it,” Kuijs said.
China’s future isn’t without its challenges, though. Analysts point out that President-elect Joe Biden likely won’t reverse some of the pressure on the country after he takes office next week.
“The Biden government will take a different, less combative and more steady approach to China,” Kuijs said. “But it is politically not possible for Biden to remove the tariffs on Chinese goods any time soon.”