Report Number 1:

China's Exports to the United States: A Comprehensive Analysis

Executive Summary

This report provides a detailed analysis of China's exports to the United States, examining export categories, profit margins, relative importance to China's total exports, and potential GDP impact if these exports were reduced to zero. Based on the latest available data, the United States remains China's largest export market, accounting for 14.8% of China's total exports in 2023, valued at approximately $501 billion. The analysis reveals that China's exports to the US span a wide range of categories, with varying profit margins from low (10-20%) to high (30-65%). If these exports were eliminated, China could face a GDP reduction of 4.3-5.6% and potential job losses of 9.3-13.8 million across manufacturing and related sectors.

1. Introduction

Trade relations between China and the United States represent one of the most significant bilateral economic relationships in the global economy. This report examines the nature, scale, and economic importance of China's exports to the United States, with particular focus on:

• Categories of exports from China to the USA
• Profit margins of these exports by industry/product category
• Percentage of US exports relative to China's total exports
• Potential GDP and employment impact if these exports were reduced to zero

The analysis uses the latest available data from authoritative sources including the US Census Bureau, China's National Bureau of Statistics, Trading Economics, the Observatory of Economic Complexity (OEC), and other reputable international trade databases.

2. Categories of China's Exports to the United States

2.1 Major Export Categories

Based on 2023 data from Trading Economics (UN COMTRADE database), China's exports to the United States totaled $501.22 billion. The major export categories include:

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2.2 Alternative Categorization

Data from the Observatory of Economic Complexity (OEC) provides a slightly different categorization, with China's exports to the US valued at $436 billion in 2023:

The discrepancy between the total values ($501.22B vs. $436B) is likely due to different classification methods, data collection periods, and reporting methodologies.

3. Profit Margins by Industry/Product Category

3.1 Margin Analysis by Category

Based on industry data and market analysis, China's exports to the United States can be classified into three margin categories:

High Margin Categories (30%+ profit margins)

Product CategoryProfit Margin RangeNotesCosmetics40-65%Health care cosmetics have the highest margins (45-65%)Clothing40-60%Shorts and pants have higher margins than shoesToys and Games30-45%Specialty and branded toys have higher marginsFurniture30-45%Decorative and designer furniture has higher margins

Medium Margin Categories (20-30% profit margins)

Low Margin Categories (10-20% profit margins)

3.2 Distribution of Exports by Margin Category

When analyzing China's major exports to the USA by margin level:

• High Margin Exports ($101.3B, ~20% of total exports to US)
  • Toys, games, sports requisites ($29.36B)
  • Furniture, lighting signs, prefabricated buildings ($30.66B)
  • Articles of apparel, knit or crocheted ($18.90B)
  • Articles of apparel, not knit or crocheted ($12.91B)
  • Footwear ($9.47B)
• Medium Margin Exports ($64.04B, ~13% of total exports to US)
  • Plastics ($23.25B)
  • Articles of iron or steel ($13.20B)
  • Optical, photo, technical, medical apparatus ($11.92B)
  • Other made textile articles ($10.14B)
  • Miscellaneous manufactured articles ($5.53B)
• Low Margin Exports ($269.76B, ~54% of total exports to US)
  • Electrical, electronic equipment ($124.52B)
  • Machinery, nuclear reactors, boilers ($88.98B)
  • Computers and related equipment ($37.9B)
  • Vehicles other than railway, tramway ($18.26B)

The remaining ~13% consists of various categories with mixed margin profiles.

3.3 Margin Analysis Conclusion

The majority of China's exports to the United States (approximately 54%) fall into low-margin categories, primarily in electronics and machinery. These sectors are characterized by high volume but relatively low profit margins (10-20%). High-margin categories (30%+ profit margins) account for approximately 20% of exports, while medium-margin categories represent about 13%.

This distribution suggests that while China's export strategy to the US is dominated by low-margin, high-volume products, there is a significant portion of higher-margin goods that contribute disproportionately to overall export profits.

4. Percentage of US Exports Relative to China's Total Exports

4.1 Current Proportion

Based on 2023 data from TrendEconomy:

• China's total exports: $3.37 trillion
• China's exports to the USA: $501 billion
• Percentage of total exports: 14.8%

This makes the United States China's largest export destination by a significant margin, with the second-largest destination (Hong Kong) receiving only 8.12% ($274 billion) of China's exports.

4.2 Historical Trend

The importance of the US market to China's exports has declined over time:

This trend indicates a gradual diversification of China's export markets, with the US share declining from over 22% in 2016-2017 to under 15% in 2023. However, the absolute value of exports to the US remains substantial, consistently exceeding $400 billion annually.

4.3 Top Export Destinations for China (2023)

1. USA: 14.8% ($501 billion)
2. Hong Kong: 8.12% ($274 billion)
3. Japan: 4.66% ($157 billion)
4. South Korea: 4.4% ($148 billion)
5. Vietnam: 4.07% ($137 billion)
6. India: 3.48% ($117 billion)
7. Russia: 3.28% ($110 billion)
8. Germany: 2.97% ($100 billion)
9. Netherlands: 2.96% ($100 billion)
10. Malaysia: 2.58% ($87 billion)

5. GDP Impact if Exports to USA Were Reduced to Zero

5.1 Direct GDP Impact

If China's exports to the USA were reduced to zero, the direct impact on China's GDP can be estimated as follows:

• China's total GDP (2023): Approximately $17.52 trillion
• Share of exports in China's GDP (2024): 18.9%
• Direct GDP contribution of exports to USA: 14.8% of export contribution = 2.8% of total GDP
• Direct GDP impact: Approximately $490 billion (2.8% of GDP)

5.2 Secondary and Multiplier Effects

The total impact would be larger due to:

1. Supply chain disruptions:
   • Manufacturing sectors heavily dependent on US exports would face significant disruption
   • Upstream suppliers to export-oriented manufacturers would see reduced demand
   • Estimated additional impact: 0.5-1.0% of GDP
2. Employment and consumption effects:
   • Job losses in export sectors would reduce consumer spending
   • Reduced business investment due to excess capacity
   • Estimated additional impact: 0.7-1.2% of GDP
3. Confidence effects:
   • Reduced business and consumer confidence
   • Potential capital outflows
   • Estimated additional impact: 0.3-0.6% of GDP

5.3 Total Estimated GDP Impact

• Direct impact: 2.8% of GDP
• Secondary and multiplier effects: 1.5-2.8% of GDP
• Total estimated GDP impact: 4.3-5.6% of GDP (approximately $750-980 billion)

5.4 Regional Impact Considerations

The impact would not be evenly distributed across China:

1. Coastal provinces (Guangdong, Jiangsu, Zhejiang, Fujian):
   • Higher concentration of export-oriented manufacturing
   • Could face GDP declines of 6-8%
   • Employment impact could reach 2-3% of regional workforce
2. Interior provinces:
   • Less direct exposure to exports
   • More affected by secondary effects through supply chains
   • GDP impact likely 2-4%

6. Employment Impact Analysis

6.1 Direct Employment Impact

If China's exports to the USA were reduced to zero, the employment impact would be:

• China's total workforce: Approximately 780 million
• Manufacturing employment: 18.1-20% of workforce (141-156 million workers)
• Export-oriented manufacturing: Estimated 30-35% of manufacturing jobs
• US export-related manufacturing jobs (14.8% of export jobs): 6.2-8.1 million jobs
• Percentage of total workforce: 0.8-1.0%

6.2 Indirect Employment Impact

• For every direct manufacturing job, approximately 0.5-0.7 indirect jobs exist in the supply chain
• Indirect job losses: 3.1-5.7 million jobs
• Percentage of total workforce: 0.4-0.7%

6.3 Total Estimated Employment Impact

• Direct job losses: 6.2-8.1 million jobs (0.8-1.0% of workforce)
• Indirect job losses: 3.1-5.7 million jobs (0.4-0.7% of workforce)
• Total estimated job losses: 9.3-13.8 million jobs (1.2-1.7% of total workforce)

7. Time Series Analysis of China's Exports to the USA

7.1 Historical Trend (2016-2024)

China's exports to the United States have fluctuated significantly over the past decade, influenced by various factors including trade tensions, the COVID-19 pandemic, and changing global supply chains.

7.2 Key Events Affecting Trade Flows

1. 2018-2019: US-China Trade War
   • Implementation of tariffs on Chinese goods
   • Export value peaked in 2018 at $538.51 billion before declining
2. 2020: COVID-19 Pandemic
   • Global supply chain disruptions
   • Reduced consumer demand in the US
   • Export value dropped to $432.55 billion
3. 2021-2022: Post-Pandemic Recovery
   • Resurgence in US consumer demand
   • Exports rebounded to $536.26 billion in 2022
4. 2023: Continued Trade Tensions and Economic Slowdown
   • Exports declined to $426.89 billion
   • Influenced by ongoing tariffs and changing supply chains

8. Mitigating Factors and Future Outlook

8.1 Potential Mitigating Factors

Several factors could potentially mitigate the impacts of reduced exports to the USA:

1. Trade diversion: China could redirect some exports to other markets
2. Currency adjustment: RMB depreciation could boost competitiveness in other markets
3. Domestic stimulus: Government could increase infrastructure spending and domestic consumption incentives
4. Industrial policy: Accelerated transition to higher-value industries and domestic market focus

8.2 Future Outlook

1. Continued Diversification: China is likely to continue diversifying its export markets, reducing dependence on the US market
2. Value Chain Upgrading: Shift toward higher-value, higher-margin products
3. Domestic Market Focus: Greater emphasis on domestic consumption as a growth driver
4. Regional Integration: Deeper trade integration with Asian neighbors through initiatives like RCEP

9. Conclusion

China's exports to the United States represent a significant portion of China's total exports (14.8%) and contribute substantially to its economy. While the majority of these exports (54%) are in low-margin categories like electronics and machinery, there is a meaningful portion (20%) in high-margin categories such as apparel, furniture, and toys.

If these exports were reduced to zero, China could face a GDP reduction of 4.3-5.6% and potential job losses of 9.3-13.8 million across manufacturing and related sectors. The impact would be particularly severe in coastal provinces with high concentrations of export-oriented manufacturing.

However, China has been gradually reducing its dependence on the US market, with the percentage of exports to the US declining from over 22% in 2016-2017 to under 15% in 2023. This trend, combined with potential mitigating factors such as trade diversion and domestic stimulus, suggests that while the impact would be significant, China has been developing resilience against such a scenario.

References

1. Trading Economics. (2023). China Exports to United States. United Nations COMTRADE database on international trade.
2. Observatory of Economic Complexity (OEC). (2023). China (CHN) and United States (USA) Trade.
3. US Census Bureau, Foreign Trade Division. (2024). Trade in Goods with China.
4. National Bureau of Statistics of China. (2023). The Profit of Industrial Enterprises above Designated Size in 2022.
5. Statista. (2025). Share of exports in gross domestic product (GDP) in China in selected years from 2000 to 2024.
6. TrendEconomy. (2023). China | Imports and Exports | World | ALL COMMODITIES.
7. World Bank. (2023). Exports of goods and services (% of GDP) - China.
8. China Briefing. (2023). China's Labor Force - Data, Trends, and Future Outlook.
9. CEIC Data. (2023). China Contribution to GDP Growth: Net Export of Goods and Service.
10. eWorldTrade. (2024). 25 Most Profitable Items to Import From China in 2024.

Report Number 2:

Comprehensive Report: Economic Impact of Reducing Exports from China to the USA

1. Overview of China’s Exports to the USA

In 2024, China’s exports to the USA accounted for approximately 16.7% of its total exports. The total value of exports from China to the USA is estimated at $435 billion USD. Given that China’s total exports amount to $2.6 trillion USD, the exports to the USA make up a significant portion of the Chinese economy, contributing notably to employment, industrial output, and national income.

2. Categorization of Exports to the USA

China’s exports to the USA are diverse, encompassing various product categories. The following table summarizes the key export categories, their estimated margins, and their share of total exports to the USA:

The largest categories of exports are Electronics and Machinery, both of which have relatively higher margins (around 15-20%), while Plastics and Textiles have lower margins.

3. High Margin vs. Low Margin Exports

• High Margin Exports (estimated margins above 10%): These include Electronics (15%), Machinery (20%), and Furniture (12%). These sectors contribute significantly to both China’s industrial output and GDP.
• Low Margin Exports (margins under 10%): These include Plastics (5%), Toys (8%), and Textiles (10%). While they represent important export categories, their lower margins indicate less value-added production.

4. Impact of Reducing Exports to the USA on China’s GDP

If exports to the USA were reduced to zero, the direct loss to China’s economy would be a $435 billion USD reduction in export value. Given the multiplier effect (estimated at 1.5 for China’s economy), the total GDP impact from the reduction in exports to the USA would be much higher.

Using the formula:

GDP Impact=Reduction in Export Value×Multiplier\text{GDP Impact} = \text{Reduction in Export Value} \times \text{Multiplier}

GDP Impact=Reduction in Export Value×Multiplier

GDP Impact=435 billion USD×1.5=652.5 billion USD\text{GDP Impact} = 435 \, \text{billion USD} \times 1.5 = 652.5 \, \text{billion USD}

GDP Impact=435billion USD×1.5=652.5billion USD

Thus, the total GDP loss could reach $652.5 billion USD, which represents a significant contraction in economic output.

5. Employment Impact

China’s export sector is a major source of employment, especially in industries that produce goods for international markets. In 2019, approximately 30 million workers were employed in export-related industries. A reduction in exports to the USA would have profound effects on employment, particularly in the sectors directly tied to US-bound exports.

• If 10% of the export-related workforce is linked to exports to the USA, we estimate that 3 million workers would be directly impacted by a halt in these exports. These workers would face unemployment or underemployment, with additional downstream effects in sectors such as logistics, packaging, and retail.
• For these 3 million workers, the estimated income loss would be approximately $30 billion USD annually (using an average income of $10,000 per worker per year). This loss in income would have a knock-on effect on consumer spending within China.

6. Sectorial Breakdown Impact

• High Margin Sectors (e.g., electronics and machinery): The impact on these sectors would be significant because they involve high-value-added products and sophisticated manufacturing processes. Job losses in these sectors would likely affect skilled workers, engineers, and high-tech industries. These sectors are also crucial for China’s industrial upgrading and economic modernization, so their loss would have long-term strategic consequences.
• Low Margin Sectors (e.g., textiles and plastics): While these sectors are important for employment, particularly in rural areas, their impact on the overall economy might be less severe due to their lower value-added nature. However, their sheer volume of exports means they still play a critical role in maintaining employment and economic activity in certain regions.

7. Potential GDP Loss as a Percentage

To estimate the GDP loss percentage, we first calculate China's total GDP in 2024. As of the latest available data, China’s GDP is approximately $18 trillion USD.

The potential GDP loss due to the cessation of exports to the USA can be calculated as:

GDP Loss Percentage=(Total GDP LossTotal GDP)×100\text{GDP Loss Percentage} = \left( \frac{\text{Total GDP Loss}}{\text{Total GDP}} \right) \times 100

GDP Loss Percentage=(Total GDPTotal GDP Loss)×100

GDP Loss Percentage=(652.5 billion USD18,000 billion USD)×100≈3.6%\text{GDP Loss Percentage} = \left( \frac{652.5 \, \text{billion USD}}{18,000 \, \text{billion USD}} \right) \times 100 \approx 3.6\%

GDP Loss Percentage=(18,000billion USD652.5billion USD)×100≈3.6%

Thus, the GDP loss would represent approximately 3.6% of China’s total GDP.

8. Broader Economic and Geopolitical Considerations

• Trade Diversification: While a reduction in exports to the USA would be detrimental, China has been actively working on diversifying its export markets. Trade relationships with Southeast Asia, Europe, and Africa are growing, which could help mitigate some of the losses in the event of reduced US-bound exports.
• Government Stimulus Measures: The Chinese government has the capacity to implement fiscal and monetary policies to counteract the economic damage. This could include stimulus spending, tax incentives, and lowering interest rates. However, it is unlikely that these measures could completely offset the loss of such a substantial export market.

9. Conclusion

A reduction of exports to the USA would have significant repercussions for China’s economy:

• Direct Export Loss: $435 billion USD in exports to the USA.
• Total GDP Loss: $652.5 billion USD, representing approximately 3.6% of China’s GDP.
• Employment Impact: Around 3 million workers could be affected by job losses.
• Income Loss: An estimated $30 billion USD annually in lost wages.
• Sectoral Impact: High margin sectors such as electronics and machinery would experience the most severe long-term effects, while low margin sectors would experience more immediate but less deep economic impacts.

China’s economy would face a severe challenge, with direct economic losses compounded by wider social and industrial consequences. The impact on employment and income would likely cause a contraction in domestic consumption, further exacerbating the downturn.

References

1. World Bank (https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?locations=CN)
2. United States Census Bureau, Trade Data (https://www.census.gov/foreign-trade/balance/c5700.html)
3. Chinese General Administration of Customs (http://english.customs.gov.cn/)
4. National Bureau of Statistics of China (http://www.stats.gov.cn/tjsj/)

A Tale of Two GPTs

Drumroll… If you guessed the first, much longer, data-heavy report was from OpenAI (which just closed a $40B funding round at a $300B valuation), you’d be wrong! The first report was from Manus.im, which doesn’t develop its own models and is ‘just’ a series of very clever agentic workflows that leverage frontier models. Manus was most recently valued at a paltry $500M (1/600th that of OpenAI).

In my couple of days of testing, Manus has been very impressive across a spectrum of activities, though not perfect. It struggles at times with long input context, and the writing isn’t quite as good as ChatGPT’s. However, it excels at multi-step tasks and a lot of ‘real’ work. Manus could, today, replace nearly all medium- to junior-level analysts in most white collar fields.

We’ll share deeper thoughts in another post, but our quick takeaways from this exercise are:

1. Agentic applications built on frontier models are hugely promising—Manus is just the first of many.
2. Frontier model makers may truly become utilities unless they can vertically integrate, which OpenAI is attempting—but this is hard! How do they compete against an ocean of ten thousand application makers in every sector?
3. The fears of a white-collar AI-cession are not overblown. The capability and cost of today’s applications will usher in unbelievable disruption—on a scale that will make the recent tariff chaos seem like a quaint summer thunderstorm.

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