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Examining the UK and China’s trading partners

Tariff disputes and the UK’s future after Brexit highlight the value of having the latest international trade data at your fingertips. Who are China’s most valuable trading partners and what’s in store for EU trade relationships?

  1. China’s most valuable trading partners are the United States, Hong Kong and the Netherlands, based on Refinitiv analysis of balance of trade figures.
  2. While China has a lot more to lose from trade tariffs than the U.S., the country still accounted for 35.2 percent of total real global GDP growth between 2017 and 2019.
  3. Germany and France have positive trade balances with the UK, highlighting the potential impact on the EU of post-Brexit trade tariffs.

Our data on the value of inter-country trade highlights just some of the biggest issues facing global markets — ongoing China-U.S.tensions and the future of the UK after Brexit.

Refinitiv analysis on the balance of trade of the leading global trading nations provides some economic insight about which countries are seen as valuable trading partners.

Using trading volumes over the past 12 months has shown to provide an interesting set of relationships.

A surplus in trade — calculated from the total value of exported goods minus the total value of imported goods — shows which countries are dependent on one another for trade income, as the figure is the amount their economy would lose if the structure of their trading relationship changed.

Who trades most with China?

As expected, China’s trading relationship with the United States generates its largest positive trading balance at US$324 billion.

Hong Kong is its second most important trading partner at $295 billion, before a sharp drop to the Netherlands in third place, which yields China a comparatively small $65 billion surplus.

Largest trading partners. China's most valuable trading partners

Meanwhile, China has a trade deficit of $67 billion with Japan and $17 billion with South Korea.

While the U.S. represents a bigger slice of the world economy — being responsible for 24 percent of global GDP compared with China’s 15 percent — its positive trading relationships generate much lower returns.

From the most recent figures for the U.S., the top spot is taken by Hong Kong ($31 billion) and the Netherlands ($24.8 billion). Predictably, China does not appear on the list, with its trade deficit with the U.S. reaching an eye-watering $419 billion in 2018.

So, in terms of trade wars, China clearly has a lot more to lose from trade tariffs than the U.S. In the wider context, however, it’s important to note just how reliant the global economy is on China.

Between 2017 and 2019, China was responsible for 35.2 percent of total real global GDP growth, way ahead of the U.S. economy with 17.9 percent. The obvious risk here is that, by impeding China’s export growth, trade tariffs could choke the world’s most powerful driver of global growth.

UK looks beyond Europe

Moving on to Brexit, it’s revealing that our analysis shows the only EU country with which the UK enjoys a trade surplus is its close neighbour the Republic of Ireland ($9 billion).

The UK’s biggest positive trade balance is with Switzerland ($16 billion), which is part of the single market but not in the EU. All the other UK’s top ten are in Asia or the Middle East. So, for the UK, the future route to positive trading relationships appears to lie beyond Europe.

In contrast, the EU’s other two big economies, Germany and France, generate a trade surplus with many of their European neighbours (see ‘Largest trading partners’ chart).

Germany has a positive balance with the UK of $48 billion and France gains $11 billion from trade with the UK. Looked at in this light, it seems that the EU may have more to lose from post-Brexit trade tariffs than the UK.

Eikon shows the United Kingdom's net trade relationships. China’s most valuable trading partnersEikon shows the United Kingdom’s net trade relationships

China’s EU trading partners

Returning to China, and this time looking at its trading relationships with Europe, Germany is an outlier. According to our data, it is the only major European nation — and one of very few worldwide — to achieve a trade surplus with China ($21 billion).

Those believing that a post-Brexit UK will benefit from greater trade with the globe’s great economic superpowers may need to be careful what they wish for.

The UK runs a trade deficit with both the U.S. and China, which could increase further as new trade deals drive greater volumes.

Of course, there are many other factors that will influence developments relating to U.S.-China trade wars and Brexit, but having the best data at your fingertips will be vital as uncertainty looks set to increase.

Global trading partners – net trade balance (Exports minus imports). China’s most valuable trading partnersChina Data — discover market-leading coverage to help you to navigate through the opportunities and risks this region is now presenting