China is decoupling from the West

Ever since the trade war between the US and China started in 2018, the mantra of Western businesses has been to decouple from China and reduce their dependency on Chinese goods. But guess what, the same happens in China, and the result is that Western countries are losing their export markets.

Economists at the Bank of Finland measured how Chinese imports have changed between 2015 and 2025. They defined ‘Western’ and ‘Eastern’ blocs in a rather unusual way, namely how the country treats Taiwan. If the country doesn’t recognise Taiwan and follows China’s policy stance, the country is considered part of the Eastern bloc. If the country recognises Taiwan or has diplomatic relations with it, it is considered part of the Western bloc.

The charts below show how China’s imports of iron and steel (left-hand chart) and nickel (right-hand chart) have changed rapidly, particularly after the pandemic when the West implemented economic sanctions against Russia and became more focused on decoupling from global suppliers that are geopolitical adversaries.

The result is also a small decline in the overall exports of Western-aligned countries as they are replaced by China-aligned countries.

Market shares of exports of iron, steel and nickel

If we look at the change in import origins for all goods between 2015 and 2025, we see in the map below that China mostly pivoted away from the US and towards Brazil and Russia. There, Brazil is mostly driven by soybeans and other agricultural exports, while Russia is obviously driven by exports of oil and gas. But we can see that countries in South America and South Asia in general also exported more to China, creating a larger dependency of these countries on demand from China. Meanwhile, next to the US, Germany, South Korea, and Japan have suffered the largest drop in exports to China.

Change in exports to China 2015-2025