The global trade shift: Could the south thrive without the U.S.?

For decades, the United States has shaped global trade, crafting the rules and commanding supply chains that underpin the global economy.

Yet, the balance of power is gradually shifting. Emerging economies in the Global South, led by a rapidly transforming China, are taking on a greater share of global commerce and influence.

Recalibration of economic power

China and India now account for 26 per cent of global GDP, compared to just nine per cent at the start of the millennium. This remarkable rise can be attributed to industrialization, export-oriented policies and technological advancements. 

Key reforms, such as China's establishment of special economic zones and India's economic liberalization in the 1990s, played pivotal roles in driving growth. 

Meanwhile, the collective share of Western economies has fallen from 56 per cent to 42 per cent. The U.S., once a manufacturing powerhouse, has seen its share of global output shrink from 30 per cent in 2000 to just 16 per cent.

This shift is not merely a reflection of changing economic weights. It signifies a fundamental transformation in trade networks and priorities. Supply chains are being reconfigured, regional integration is accelerating and the dominance of traditional hubs is being challenged. 

As the Global South strengthens its economic ties, it is redefining its relationships with traditional centers of power, including the United States.

China's expanding role in global trade

China's economic transformation has been unprecedented in scale and speed. Since launching its Reform and Opening-up Policy in 1978, its share of global exports has climbed from under 1 per cent to over 14 per cent. By 2009, China had become the world's largest exporter, establishing itself as a cornerstone of global trade.

Beyond trade, China has sought to enhance its role in the Global South through initiatives like the Belt and Road Initiative (BRI). 

Launched in 2014, the BRI has financed infrastructure projects across Asia, Africa, and Latin America - from railways in Kenya to ports in Pakistan. 

These investments, which exceed $1trillion, aim to address connectivity gaps and foster regional growth. 

Trade shifts and mutual benefit

China's trade relationships have undergone a significant shift. In 1990, high-income countries accounted for 70 per cent of its trade.

Today, that share has fallen to below 50 per cent, while emerging markets now account for a growing majority of China's trade, underscoring their increasing importance in global commerce. 

Over the past decade, Chinese exports to the Global South have grown by 111.7 per cent, surpassing its exports to the Global North in 2021.

While trade with Western economies continues to expand, its pace is slower. Chinese exports to the Global North increased by 62 per cent over the same period. 

Simultaneously, China's imports from the Global South have risen by 46.6 per cent, indicating a more balanced exchange.

In March 2024 alone, Chinese exports to BRICS nations reached an annualized rate of $1.6tn, quadruple the value of its exports to the United States.

Investment as a catalyst for growth

China's investments in the Global South extend beyond trade, focusing on long-term development.

With an outward Foreign Direct Investment (FDI) stock of $2.9tn in 2023, China has become the world's largest international investor.

These funds often target transformative infrastructure projects that address development bottlenecks in transportation, energy and logistics.

For example, railways in Kenya have connected landlocked regions to major markets, while ports in Pakistan, such as Gwadar, have strengthened links between Central Asia and the Arabian Sea.

These projects not only create economic opportunities but also carry geopolitical significance, as they reshape regional connectivity and influence.

U.S. role in a changing landscape

The United States, meanwhile, faces complex challenges. Policies aimed at reshoring manufacturing and decoupling from China reflect efforts to rebuild domestic industries but may limit the U.S.' integration into evolving global supply chains.

Rising protectionism and slower economic growth in the West contrast with the dynamism of many Global South markets.

Regions like Africa, south-east Asia, and Latin America are no longer peripheral to the global economy.

Supported by trade and investment flows, these markets are driving growth and becoming key players in a multipolar world order.

While the Global South continues to engage with Western economies, its growing ties with China suggest a diversification of dependencies.

A new global trade order?

Could the Global South thrive without the U.S.? While a complete decoupling is unlikely, increasing economic integration within the South suggests a gradual rebalancing of dependencies, with Western partners playing a less central role in many sectors. 

China's accelerating trade with emerging markets, supported by initiatives like the BRI, is creating alternative frameworks for global commerce.

This transition reflects not the decline of U.S. influence but its evolution into a role that must adapt to a more multipolar world. 

For decades, Western nations shaped the rules of global trade. Today, the Global South is beginning to influence those rules, reflecting its priorities and ambitions.

As China deepens its partnerships with emerging economies, the future of global trade is likely to be more decentralized and diverse.

The rise of the Global South is not just about economic catch-up; it is about asserting agency in the global economy.

As this shift continues, the United States may find itself as one partner among many in a more balanced and interconnected global order.