China overtakes US to become biggest trading nation
For many economies, China will soon be most important trade partner, analysts say, showing need for it to play bigger role in global bodies
China has become the world's biggest trading nation in goods, ending the post-war dominance of the United States, according to official figures.
China's customs administration said the combined total for imports and exports in Chinese goods reached US$3.87 trillion in 2012, edging past the US$3.82 trillion trade in goods registered by the US Commerce Department.
The landmark total for Chinese trade indicates the extent of Beijing's dependence on the rest of the world to generate jobs and income compared with a US economy that remains twice the size, and more self-contained. The US economy is worth US$15 trillion compared with the US$7.3 trillion Chinese economy.
The US not only has a large internal market for goods, but also dominates the trade in services. US total trade amounted to US$4.93 trillion in 2012, according to the US Bureau of Economic Analysis (BEA), with a surplus of US$195.3billion.
But like most Western nations, the US deficit in the trade of goods weighs heavily and is expected to get only larger.
The deficit in goods was more than US$700 billion compared with China's 2012 trade surplus, measured in goods, which totalled US$231.1 billion.
Jim O'Neill, head of asset management at Goldman Sachs, said the huge market for Western goods would disrupt regional trading blocs as China becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France.
"For so many countries around the world, China is becoming rapidly the most important bilateral trade partner," he said. "At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe."
"It is remarkable that an economy that is only a fraction of the size of the US economy has a larger trading volume," Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said.
The increase isn't all the result of an undervalued yuan fuelling an export boom, as Chinese imports have grown more rapidly than exports since 2007, he said.
The US emerged as the preeminent trading power following the second world war as it spearheaded the creation of the global trade and financial architecture.
China began focusing on trade and foreign investment to boost its economy after decades of isolation under Mao Zedong , who died in 1976. Economic growth has averaged 9.9 per cent a year from 1978.
China became the world's biggest exporter in 2009, while the US remains the biggest importer, taking in US$2.28 trillion in goods last year compared with China's US$1.82 trillion of imports. HSBC forecast last year that China would overtake the US as the top trading nation by 2016.
According to O'Neill, the trade figures underscore the need to draw China further into the global financial and trading architecture that the US helped create.
Bloomberg, The Guardian