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As per ITC trade map data, global exports declined by 6% in 2023, after an 11% rise in 2022 and 26% rise in 2021.

World is not deglobalizing, trade routes are changing. Global exports to GDP stand at 22.2% in 2023 in line with the average observed from 2010 to 2020 or 2005-2020. However, the effort to restrict China is clearly on the rise. Just this week, Canada was another nation to put a 100% tariff on Chinese electric vehicles and 25% on Chinese steel, on the footsteps of measures taken by the US in May. Europe, India, Mexico and Indonesia have also raised their imports on several Chinese products. To an extent, restrictive measures around China is result of its own actions of increasingly relying on exports as its domestic growth slows, raising concerns about industrial decline in various regions around the world.

US direct import from China continue to decline; however Chinese goods still find way into the US via other nations. While the US’ total import fell 6% in 2023, its import from China declined a massive 22%. Hence China’s share in US’ import has declined from the peaks of 22% in 2017 to 14% now (Chart 6). Exports to the US from Vietnam, Mexico, Canada, Thailand, and Taiwan along with India has improved. Many of these countries are seeing large swathes of FDI from China. As per Hinrich foundation research, “ Chinese content has strategically relocated to third countries before being exported with value-add to the United States, even as the West seeks to decouple or de-risk from the world's largest manufacturing economy”¹.

China continues to maintain its market share in Europe, Japan, and aggregate Asian belt.  China’s share in global trade is ~15% from 2021-23 vs. 12-13% in the previous decade.

Chinese goods find another destination: China, which faces protectionist measures in the US, is increasingly diverting its products to Russia and Africa (Table 2). Chinese goods now account for 53% of Russia’s imports and 30% of Africa’s imports. Consequently, China’s share in global trade continue to stay the highest at 15% (relatively stable in last three years).

Many economies, including Japan, Korea, and Germany, have their companies deeply integrated into China’s industrial supply chain, making it challenging for them to limit imports from China. Conversely, some countries, such as Mexico, face pressure from the US to restrict 'Made in China' products. Most developing Asian countries are economically tied to China, making it difficult for them to consider trade barriers, despite domestic industry calls for protection and US pressure to curb the transshipment of Chinese goods. Europe is worried about industrial competition but unable to restrict Chinese imports in a meaningful fashion, as yet.

Despite an effort to limit Chinese goods, India’s import from China continues to rise. 18% of India’s import comes from China. Stripping out oil, 24% of India’s import come from China

The main area of higher imports are electrical and electronics products followed by nuclear reactors/ boilers, machinery and mechanical appliances (Table 3).

Trade is shifting towards EM economies: Vietnam, India, Indonesia, and Brazil are gaining market share in global trade at the expense of loss in market share by Germany, Japan, UK, France and Korea (Chart 4).

India gains exports market share in 2023: In line with global trends, India’s exports also declined by 5% in calendar year 2023 , marginally less than 6% fall in world trade and Chinese exports each. As such, India’s exports share continue to see a piecemeal improvement. As of 2023, India accounts for 1.85% of global exports vs. an average of 1.66% in the previous decade (Chart 2).

Indian textile sector gains prominence in the US. India continues to gain better access to US market, particularly in textile and electricals and electronics products (Table 1). Indian textile companies has seen a significant gain in their trade share with the US.

Looking at global trade, Indian electrical equipment, select copper articles, pharma products, ship boats and floating structures are witnessing a gradual gain in global trade, a few at the expense of China (Chart 7).

Chart 1: Share of global trade in world GDP has flatlined (22.2% of GDP in 2023 vs. avg. 22.8% (2006-2023))

Chart 2 & 3: India’s share in world exports rose by 20bps from 2018 to 2023; China’s share also rose in this five-year period, is broadly flat in last 3 years

Chart 4 & 5: Trade is shifting towards Emerging Market economies

Chart 6 & Table 1: India’s gains a part of the declining share of US imports from China; mainly in cotton, textile materials, iron and steel articles, and electrical machinery

Chart 7: Electrical equipment, select copper articles, pharma products, ship boats and floating structures are witnessing a gradual rise in world export share, a few at the expense of China

Table 2: China +1 is most visible in the U.S. with the share of China in US imports has dropped by ~6 percentage points from 2018 to 2023. (The way to read this table is China accounted for ~22% of US imports in 2018. Now by end 2023, it accounts for ~16%. The share of China in US imports dropped by ~6% pt from 2018 to 2023. And US accounts for 15% of China’s total exports)

Table 3: India shows a rise in share of China in its total imports by ~2.5% pt from 2018 to 2023 mainly in electrical and electronics products followed by nuclear reactors/ boilers, machinery and mechanical appliances

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