External sector of the Chinese economy -- the sum of exports and imports of its goods and services -- amounts to about 40 percent of the country’s GDP.

By that measure, China is an important part of the world trading system, and a country whose economic growth very much depends on its overseas business transactions.

In 2024, domestic demand (household consumption, business investments and government spending) and foreign trade made an almost equal contribution to China’s economic growth of 5 percent.

Based on trade data for the first eleven months of last year, nearly half of China’s GDP growth will again come from its large trade surpluses.

A substantial part of that trade business will originate from markets in Asia, Africa and, to a lesser extent, from Latin America and some European countries.

Most of those markets are part of China’s Belt&Road (B&R) program covering 145 countries that have signed a Memorandum of Understanding with Beijing as of May 2025.

China’s B&R trade business during last year’s January to November interval came in at $3 trillion and represented more than half of China’s foreign trade over that period. The vast B&R area trade showed an increase of 5.3 percent, with imports from China growing 10.5 percent.

Focus on Asia and Africa

That is a significant achievement in China’s market diversification to stabilize trade income and economic growth.

Asia is the most important part of China’s B&R market. The 11 countries of the Association of Southeast Asian Nations (ASEAN) are China’s by far the largest trade partner, accounting for $1 trillion of China’s foreign trade over the first eleven months of last year. Adding South Korea and Japan, that brings China’s total Asian trade to more than $1.5 trillion – nearly 30 percent of China’s total foreign trade business.

During the same period, Latin America was the second-largest regional market with half a trillion-dollar trade turnover, a 5 percent growth and a 7 percent increase in Chinese exports. A remarkable aspect of Latin American trade is that Brazil, the area’s largest economy and China’s strategic partner, showed a weak trade performance and was only one-third of China’s Latin American trade business.

By contrast, Africa was China’s much smaller market last year, but the trade volume increased 18 percent, Chinese exports to Africa soared 26 percent and Chinese purchases of African goods grew more than 5 percent.

Those numbers strongly suggest that Asia and Africa will be the markets where China intends to consolidate its leading position.

To do that, Beijing will have to shore up its relations with Japan and South Korea. They are China’s largest Asian trade markets, with almost identical volumes of bilateral trade with China (about $300 billion) – but with very different outlooks for business prospects.

The just completed Sino-Korean summit in Beijing shows firm leadership decisions to broaden business ties and trade transactions. Japan, however, is a completely different story, because rising political and security tensions could lead to significantly worsening relations between Asia’s two largest economies.

China’s two other Asian neighbors -- Russia and India -- are smaller but equally important trade partners. Trade business with Russia last year declined 8.7% because of a large economic slowdown as Moscow sought to tame its double-digit inflation and to manage its heavily sanctioned economy. But China’s thawing relations with India led to a strong, 11 percent, increase in bilateral trade, with China’s sales to India surging 12 percent and India’s exports to China growing 6 percent.

Mind the security faultlines

Asia is offering China trade markets in world’s fastest growing economies with free-trade areas, rising connectivity and widening integration processes.

But China faces a very different situation in its key western markets -- the European Union (E.U.) and the United States: slowing economic growth, rising regulatory problems, systemic bias and de-risking (in fact, decoupling) warnings.

Despite that, the E.U. is still China’s largest and most lucrative trade market. Business transactions in the eleven months of last year grew 5 percent to $749.3 billion, with Chinese exports to the E.U. increasing 8 percent and E.U. sales to China declining 2 percent. That gave China its largest bilateral trade surplus of $267 billion.

The U.S. is China’s big trade problem bound up with intractable political and security issues. Beijing’s U.S. trade transactions dropped 18 percent during last year’s January-November period to $514.7 billion. China’s sales to the U.S. fell 19 percent, and its purchases from the U.S. declined 13 percent. China still pocketed a net income of $257 billion on its U.S. trades.

The outlook for U.S.-China trade is not good. China apparently understands that its U.S. relations are mired in systemic and security problems that cannot be patched up by appeals to “win-win cooperation” and calls for endless and unproductive dialogues. The current trade dynamics indicate that China wants to limit its exposure to U.S. trade and financial transactions.

China would do well to understand that the same approach applies to the E.U., even though Germany bet the future of its automobile and chemical industries on China’s markets. It would be unwise for Beijing to allow mistakes in its estimates of the enduring strength of American and European ties.

Asia and Africa are China’s best and safest bets in promoting the Global East and South in the world of rapidly shifting trade and security faultlines.