The New York stock market ended down on 14 December at least amid mounting concerns about an escalating U.S- China trade war. It serves as an urgent reminder, how much China has been increasingly shaping U.S. trade relations. hanse data show that during the past 30 years, China increased its share in total U.S. imports from 1.6 percent in 1987 to 22.0 percent in 2017. It is a reflection of China’s remarkable successful international trade strategy and rapid transformation since the mid-1980s. The trade war risks disrupting this increasingly symbiotic relationship between the U.S. and China.
China’s emergence as a dominant trade power is reflected in its ability to penetrate the U.S.’ fastest growing imports. During 1987 and 2017, the 10 fastest growing sectors, in the Standard International Trade Classification out of 150 groups, increased their share in U.S. imports from 19.1 percent in 1987 to 36.7 percent in 2017 (Figure 1). China expanded its market share in these sectors from 0.4 percent in 1987 to 30.4 percent in 2017 representing in 2017 50.7 percent of U.S. imports from China. Japan, in the same sectors, lost market share from 26.7 percent in 1987 to 5.1 percent in 2017.
Figure 1. China’s share in U.S. fastest growing imports
Figure 2. China's dominant U.S. markets
China built a dominant market share in a narrow set of sectors. In 2017, the 10 sectors where China had the largest market share of on average 60.6 percent represent only 15.6 percent of U.S. imports (Figure 2). The dominance of China in a relative small group of sectors illustrates the significant relative inter-dependence of the two countries. While the U.S. administration continues to threaten imposing more restrictions on imports from China, it seems clear that those will harm certain segments of the U.S. economy.