China is overtaking the U.S. as leading global trader

Shin Cheol-soo no longer sees his future in the United States.

The South Korean businessman supplied components to American automakers for a decade. But this year, he uprooted his family from Detroit and moved home to focus on selling to the new economic superpower: China.

In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S.

In the most abrupt global shift of its kind since World War II, the trend is changing the way people live and do business from Africa to Arizona, as farmers plant more soybeans to sell to China and students sign up to learn Mandarin.

The findings show how fast China has ascended to challenge America’s century-old status as the globe’s dominant trader, a change that is gradually translating into political influence.

Despite China’s now-slowing economy, its share of world output and trade is expected to keep rising, with growth forecast at up to 8 percent a year over the next decade, far above U.S. and European levels.

Last year, Shin’s Ena Industry Co. made half his sales of rubber and

"The United States is a tiger with no power," Shin said. "Nobody can deny that China is the one now rising."

Trade may get less publicity than military affairs or diplomacy, yet it is commerce that generates jobs and raises living standards. Trade can also translate into political power. As shopkeepers say, the customer is always right: Governments listen to countries that buy their goods, and the threat to stop buying is one of the most potent diplomatic weapons.

China has been slow to flex its political muscle on a large scale but is starting to push back in disputes over trade, exchange rates and climate change.

"When a German chancellor or French president goes to China, right at the top of the list, he’s trying to sell Airbuses and other products and is being sensitive to China’s political concerns, like on human rights," said C. Fred Bergsten, a former U.S. Treasury Department official who heads the Peterson Institute for International Economics in Washington.

The United States is still the world’s biggest importer, but China is gaining. It was a bigger market than the United States for 77 countries in 2011, up from 20 in 2000, according to the AP analysis.

The AP is using International Monetary Fund data to measure the importance of trade with China for some 180 countries and track how it changes over time. The analysis divides a nation’s trade with China by its gross domestic product.

The story that emerges is of China’s breakneck rise, rather than of a U.S. decline. In 2002, trade with China was 3 percent of a country’s GDP on average, compared with 8.7 percent with the U.S. But China caught up, and surged ahead in 2008. Last year, trade with China averaged 12.4 percent of GDP for other countries, higher than that with America at any time in the last 30 years.

Of course, not all trade is equal. China’s trade is mostly low-end goods and commodities, while the U.S.competes at the upper end of the market.

Also, even though Chinese companies invest abroad and employ thousands of foreign workers, they lag behind American industry in building global alliances and in innovation, which is still rewarded in the marketplace. China’s competitive edge remains low labor and other costs, while the U.S. is the world’s center for innovation in autos, aerospace, computers, medicine, munitions, finance and pharmaceuticals. The Chinese have yet to build a car that will pass U.S. or European emission standards.

And the United States still does more trade overall -- but just barely. If the trend continues, China will push past the U.S. this year, a remarkable feat for a country so poor 30 years ago that the average person had never talked on a telephone.

"The center of gravity of the world economy has moved to the east," said Mauricio Cardenas, the finance minister in Colombia. Like most of Latin America, his country is still more closely tied to the U.S., but its trade with China has risen from virtually nothing to 2.5 percent of GDP, a more than tenfold increase since 2001.

In one sense, China’s growing presence in trade is just restoring the Middle Kingdom to its historic dominance. China was the biggest economy for centuries until about 1800, when the industrial revolution propelled first Europe and then the U.S. into the lead.

China began its return to the global stage in the 1990s as a manufacturer of low-priced goods, from T-shirts to toys. Factories in other countries slashed costs to meet the "China price" or were pushed out of the market.

As the new millennium dawned, the U.S. remained by far the world’s dominant trader, rivaled collectively by Europe but no single nation. However, from 2000 to 2008, China’s imports grew 403 percent and exports 474 percent, driven in part by its entrance into the World Trade Organization and its move to higher-value production.

China’s imports of oil and raw materials for its factories propelled resource booms in parts of Asia, Africa and Latin America. China’s demand for steel for manufacturing and construction grew so fast that its mills now consume half the world’s output of iron ore.

Meanwhile, exports surged as Apple, Samsung, Nokia and other electronics giants shifted final assembly to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China’s column in 2003, followed by Malaysia in 2007.

In the U.S., Vermont-based manufacturer SBE Inc. started exporting capacitors -- energy-storage devices used in computers, hybrid cars and wind turbines -- in 2006. The company now gets 15 to 20 percent of its revenue from China, and has hired 10 employees there.

As China grew richer, its people spent more.

Chinese ate more pork, fried chicken and hamburgers, rapidly sending up the demand for soybeans to make cooking oil and feed for pigs and cows. Some cattle ranchers in Latin America turned grazing land into fields of soy, a crop few in their region consume. Soybean exports helped push Brazil into the China column in 2010, and put China neck and neck with the U.S. as Argentina’s top trading partner.

Even in the U.S., better known for manufacturing, farmers are rushing to sell to China. The United States is the largest exporter of soybeans to China, followed by Brazil and Argentina. China’s purchases of American soybeans have risen from almost nothing 20 years ago to a quarter of the crop: 24 million tons worth $12.1 billion, America’s largest export to China.

The boom is having a profound effect on farming communities, said Grant Kimberley, whose family farm near Des Moines, Iowa, now grows 4,000 acres of soybeans, up from 3,500 eight years ago.

"It’s provided more revenue for these farmers than they’ve ever seen in t