With all the turmoil COVID-19 has caused on a global and local scale, issues from 2019 seem too meager to worry about. Rightfully so as countries and global organizations try to control a virus killing millions, overrunning hospitals, shutting down cities, and leaving many unemployed.
One of the previous “issues” was the United States’ relationship with China. At the onset of the pandemic, the two biggest economies in the world were at the beginning of a trade war, after years of Chinese exports becoming American imports, thus destroying factories, jobs, and livelihoods in the US.
As the US still struggles with the pandemic, seeing a record number of daily cases in the previous week, China has kept the spread of the virus in their country very limited. China has thus come out of this global pandemic, at least at the current time, in a better spot than the US. While the United States has the image of a country that buys everything and makes nothing, they are the second-largest exporter in the world, behind only China.
As the biggest exporter in the world, China is able to supply other countries what they need. But their influence goes beyond that. Trade exchanges not only goods and services, but ideas, culture, and power. If more countries are reliant on China for its goods and services, China indirectly gains more influence and power over other countries. What small country is going to voice critical opinions about their biggest supplier?
While the US keeps shooting itself in the foot with its pandemic response, or lack thereof, it is losing more than it realizes. Not only is it hurting its current economy, future economic opportunities, and struggling over internal matters, it is losing some of its influence on other countries as well.
China is back to firing on all cylinders. And while the US is recovering, it is not back to full strength just yet.
By the Numbers
In January of 2020, the US exported $129 billion of goods and services. This is in line with previous trends as January 2019’s value was $129 billion and January 2018’s was $125 billion. China on the other hand had exports worth $188 billion in January 2020. Their January 2019 and 2018 numbers were $191 billion and $174 billion, respectively.
China experienced an outbreak of COVID-19 earlier than the US did. Because of that, their exports started dropping earlier, bottomed out earlier, and recovered sooner. China had a steep fall from the top. As February was their lowest monthly trade value of exports in years, at $68 billion. March was also below their average, at $162 billion. They have steadily recovered and posted a July export value of $211 billion, their highest in three years.
The US had a fall almost as steep, but the recovery has not been as fast. For the US, April exports were down to $95.4 billion, bottomed out at $90.7 billion in May, and recovered slightly in June to $105 billion. Their latest number is from August, $118 billion. That is still billions below the lowest values of the past three years, excluding pandemic months.
It may be premature to hit the panic button. After all, China’s latest value came five months after its bottom. One could argue we need to see the export value for the US in October (five months after May) to get a better understanding.
But what about first-mover advantage? The longer the US takes, the bigger the share of the pie China can take. And what about other leading countries? Germany, which bottomed out in April is almost back to pre-pandemic export levels. Japan and the UK on the other hand, are worse than the US in the recovery of their exports.
With a “third” wave in the United States and lockdowns in major cities of Europe, China has a golden opportunity to assert their influence. They can come out of this pandemic better than any other country. If they can provide exports to countries all around the world and help countries while the US and Europe are struggling, they have a chance to gain more power.
China’s influence is just beginning. In times of crisis, most countries look to the United States for assistance. The US is not able to help other countries right now if it cannot help itself. China should recognize the opportunity it has a chance to become the global power. China’s neighbor, Taiwan, has just gone 200 days without recording a domestic COVID-19 infection. China is not far behind them in their recovery from the pandemic.
Just as the US came out of WWII a global power, who will come out of this pandemic with more power?
All export figures come from The Observatory of Economic Complexity