A year into Trump presidency, 'pivot to China' gathers pace

Highlights:

• China strengthens ties with key partners amid US tensions
• British PM latest to seek new trade relationship with China
• China's exports to non-US markets rise significantly in 2025
• Yuan usage rises as China pushes for global currency influence
• Critics caution about China's economic coercion despite new trade pacts

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 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 $1.2 trillion in 2025, monthly forex inflows touched $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 Wednesday evening 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 $20 trillion economy and $45 trillion worth of stock and bond markets, China is emerging as a "steady partner" for many countries, said 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 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."

Starmer's four-day visit to China will be the first by a British prime minister since 2018 and follows that of Canadian Prime Minister Mark Carney earlier this month, the first Canadian prime minister to visit Beijing since 2017.

During Carney's visit the two nations signed an economic deal to tear down trade barriers and forge a new strategic relationship. 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 Tuesday 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, Trump's return to the White House in January 2025 sharply escalated tensions on multiple fronts, including trade and technology.

Trump raised tariffs on China to over 100% in April, before partially reversing and settling for a temporary truce, while Beijing boosted its exports to non-US markets and rolled out support measures for its private enterprises and markets.

Chinese shipments to the US fell 20% in 2025, but rose 25.8% to Africa, 7.4% to Latin America, 13.4% to Southeast Asia and 8.4% to the European Union last year.

"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," 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% 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 $100.1 billion in December, according to bank settlement data from its forex regulator. Its official forex reserves hit a 10-year high of $3.36 trillion.

Its financial market has emerged robust from trade disputes with the Shanghai index climbing 27% 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 Southeast 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, 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," 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."