China - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-02-03

In 2019, China was the world’s second-largest economy with a gross domestic product (GDP) of $14 trillion, following the United States with a $21 trillion GDP, and ahead of Japan with a $5 trillion GDP.  

China World's Second-Largest Economy
   China World’s Second-Largest Economy

Source: World Bank (pdf)

China’s economy is larger than those of Japan, Germany, and India combined. China’s largest province, Guangdong, has a nominal GDP larger than Spain’s; the Yangtze river delta, centered around Shanghai, has a GDP roughly the size of Germany’s.  

While China’s GDP grew 6.11% in 2019, an aging workforce, slow economic reforms, mounting debt, and recent trade turmoil, have contributed to a downward trajectory for economic growth over the last five years. The COVID-19 crisis has intensified this trend.  

China GDP Growth 2015-2019
    China GDP Growth 2015-2019

Source: World Bank (pdf)

U.S.-China Trade Relationship

The trade relationship between China and the United States has been characterized by ongoing trade disputes, retaliatory tariffs, increasing sanctions, and general uncertainty. In 2019, U.S. exports of goods to China were $106.4 billion, down 11.5% from $120.3 billion in 2018.

U.S. Exports to China; 2015-2019
​U.S. Exports to China’ 2015-2019​

Source: U.S. Census Bureau

China’s Industrial Policy

China continues to rely upon industrial policy tools including subsidies, market access restrictions, pressures to transfer technology, and other support for domestic competitors. These policy tools undermine the ability of foreign firms to operate on a level playing field in the Chinese market. Furthermore, the Chinese Communist Party’s control over various economic actors in the market has increased significantly.

Phase One Trade Agreement

To address the imbalances in the trade and investment relationship between the U.S. and China, both countries signed the Phase One Trade Agreement on January 15, 2020 (pdf) that entered into force on February 14, 2020.

This agreement requires structural reforms and other changes to China’s policies and practices regarding intellectual property, agriculture, financial services, currency and foreign exchange, and important aspects of China’s technology transfer policies.

As part of this agreement, China agreed to considerably increase imports of U.S. goods and services over the next two years by no less than $200 billion above the amount China imported from the U.S. in 2017.