A year into Trump presidency, ‘pivot to China’ gathers pace
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Backed by its US$20 trillion (S$25 trillion) economy and US$45 trillion worth of stock and bond markets, China is emerging as a “steady partner” for many countries.
PHOTO: REUTERS
BEIJING/HONG KONG - When US President Donald Trump took office a year ago with an “America First” agenda, many saw trouble for China’s sluggish economy, but Beijing has thawed frosty relationships with other trade partners to post a record trade surplus.
While Mr Trump’s policies have strained ties with traditional US allies, China has turned its focus to fostering ties with key partners, including Canada and India, analysts say.
As a result, the world’s second-largest economy’s trade surplus hit a record US$1.2 trillion (S$1.51 trillion) in 2025, monthly forex inflows touched US$100 billion, the largest ever, and the global usage of China’s currency, the yuan, has expanded.
When British Prime Minister Keir Starmer lands in China on the evening of Jan 28 hoping to reinvigorate recently strained business ties, analysts and experts say Beijing is expected to further expand its global political and economic influence.
Backed by its US$20 trillion economy and US$45 trillion worth of stock and bond markets, China is emerging as a “steady partner” for many countries, said Dr Aleksandar Tomic, economics professor at Boston College.
“I think China has done a good job and rightly so to position itself as the reliable and stable trade partner,” said Mr Derrick Irwin, co-head of intrinsic emerging markets equity at Allspring Global Investments.
“They basically said, look, you’ve got a massive trade partner in the US that’s become a little more uncertain. We can offer predictability and certainty. And I think that’s very fair.”
Mr Starmer’s four-day visit to China
During Mr Carney’s visit the two nations signed an economic deal to tear down trade barriers
Mr Carney described China as “a more predictable and reliable partner”.
But China is not alone in eyeing new trade pacts to de-risk from the United States.
India and the European Union struck a long-delayed trade deal on Jan 27 that will slash tariffs on most goods, boosting two-way trade to potentially double European exports to the South Asian country by 2032.
China economy resilient
While the world’s two largest economies have been locked in geopolitical disputes for the past few years, Mr Trump’s return to the White House in January 2025 sharply escalated tensions on multiple fronts, including trade and technology.
Mr Trump raised tariffs on China to over 100 per cent in April, before partially reversing and settling for a temporary truce
Chinese shipments to the US fell 20 per cent in 2025, but rose 25.8 per cent to Africa, 7.4 per cent to Latin America, 13.4 per cent to South-east Asia and 8.4 per cent to the European Union in 2025.
“Many countries previously have not been China-friendly are now kind of pivoting to China... because the United States is becoming a lot less predictable,” Prof Tomic said.
“The more the US gets difficult to deal with, the more it opens up for China.”
Despite the trade tensions with the US, China’s economy, under deflationary pressure at home due to weak domestic consumption and a long-term property sector slump, has met the government’s target of 5 per cent growth in 2025.
In recent months, China has taken a raft of measures to boost foreign investment, including pilot programmes in Beijing, Shanghai and other regions to expand market access in services such as telecoms, healthcare and education.
The country recorded the largest-ever monthly forex inflows of US$100.1 billion in December, according to bank settlement data from its forex regulator. Its official forex reserves hit a 10-year high of US$3.36 trillion.
Its financial market has emerged robust from trade disputes with the Shanghai index climbing 27 per cent over the past year, outperforming US equities, the market turnover hitting a record high and the yuan expanding its global usage.
With the dollar becoming less appealing to investors due to Trump’s erratic approach to trade and international diplomacy, Beijing is also pushing ahead with its ambition to bolster the global usage of yuan, said bankers with knowledge of the matter.
Some of the big global banks are scrambling to boost yuan liquidity in offshore hubs and put in place frameworks for faster payment settlements in yuan in trade corridors of China and South-east Asia, the Middle East, and Europe, they added.
“We have seen quite a few cycles of China trying to internationalise yuan and then pulling back,” said a banker at a global bank with China presence. “This time it’s different... Trump policies are very conducive for boosting yuan usage.”
More than half of China’s cross-border transactions are now settled in yuan, from almost none 15 years ago, while nearly half of China’s overseas bank lending is now in renminbi, according to the latest data from the PBOC and SAFE.
China caution
But some foreign policy analysts caution against China’s new, friendlier economic and political playbook.
Despite the new trade pacts, Ms Patricia Kim, a foreign policy fellow at Washington-based Brookings Institution, said distrust of the US does not translate into trust in Beijing for US allies and partners.
“Many of these countries harbour deep concerns about China’s approach to trade, its use of economic coercion, and unresolved maritime and historical disputes,” Ms Kim said.
“In the current moment, China may appear more restrained or pragmatic when compared with the Trump administration’s extreme rhetoric and actions. But Beijing’s actual behaviour has not been especially reassuring.” REUTERS
