FLORENCE, Italy/BEIJING -- The U.S. has eclipsed China as the world's leading trader of goods for the first time since 2012, though both countries' imports and exports declined amid sluggish global economic growth.
U.S. trade in goods totaled $3.7 trillion in 2016, topping China's $3.68 trillion, the World Trade Organization said Wednesday. American imports and exports declined 2.8% and 3.2%, respectively, while China's fell 5.5% and 7.7%.
Problems for China
China had led world trade charts since passing the U.S. in 2013. Sluggish demand from emerging economies amid slower growth was the largest factor in the erstwhile leader's fall. But exports to advanced economies slid as well, indicating an overall dip in China's competitiveness as an exporter.
Low production costs have long allowed China to function as the world's factory, fueling the country's rise in global trade. But labor costs are climbing, and land prices are soaring. Foreign businesses and Chinese companies alike increasingly are moving factories to nations such as Vietnam. The market share of Chinese-made goods is sliding in advanced nations, according to the country's General Administration of Customs.
The yuan also has lost roughly 10% of its value against the dollar over the past two years, pushing down China's dollar-denominated trade figures. The currency's depreciation has bolstered exports to only a limited extent.
A large share of China's exports comes from the assembly plants of foreign firms, which means decisions by those companies hold strong sway over that aspect of the economy. As China progresses on structural reforms to expand the service sector, a trade recovery will rest on expanding imports.
Global goods export value dropped 3.3% to $15.46 trillion in 2016, while global imports declined 3.2% to $15.79 trillion. Falling oil prices played a role, as did a rise in the dollar's effective exchange rate against world currencies.
Trade volume climbed 1.3% last year, down from 2.6% in 2015 for the slowest growth since 2009. Imports by developing economies edged up only 0.2%, having fallen off steeply during the January-March quarter and recovering gradually thereafter. Those nations' exports climbed 1.3%, more slowly than in years past. Developed economies achieved a 2% gain in imports and 1.4% rise in exports.
Overall, the global real economy grew 2.3% in 2016, exceeding growth in trade volume for the first time in 15 years -- a sign that trade is losing strength as a driver of the global economy. This phenomenon results partly from a relatively stagnant economy's limiting effect on trade. Structural changes to industry in various nations also play a role. Newly industrialized emerging nations now produce domestically many goods they previously imported.
The WTO forecasts 2.4% growth in trade volume for 2017 but places that figure within a likely range of 1.8-3.6%, citing heavy uncertainty regarding the economic environment, trade policy, monetary policy and other factors.
"Much of the uncertainty around the outlook is of course political -- and not only geopolitical," Director-General Roberto Azevedo said. The Donald Trump administration in the U.S. continues to tout protectionist trade policy plans, and the U.K.'s departure from the European Union is drawing closer.
"Closing the borders to trade would only worsen the situation" that many face amid structural economic shifts, Azevedo said. "It would not bring the jobs back; it would make more jobs disappear."