How China Overtook the U.S. As the World’s Trade Partner
In 2018, trade accounted for 59% of global GDP, up nearly 1.5 times since 1980.
Over this timeframe, international trade has transformed significantly—not just in terms of volume and composition, but also in terms of the countries that the rest of the world leans on for their most important trade relationships.
Now, a critical shift is occurring in the landscape, and it may surprise you to learn that China has already usurped the U.S. as the world’s most dominant trading partner.
Trading Places: A Global Shift
Today’s animation comes from the Lowy Institute, and it pulls data from the International Monetary Fund (IMF) database on bilateral trade flows, to determine whether the U.S. or China is a bigger trading partner for each country from 1980 to 2018.
The results are stark: before 2000, the U.S. was at the helm of global trade, as over 80% of countries traded with the U.S. more than they did with China. By 2018, that number had dropped sharply to just 30%, as China swiftly took top position in 128 of 190 countries.
The researchers pinpoint China’s 2001 entry into the World Trade Organization as a major turning point in China’s international trade relationships. The dramatic shift that followed is clearly demonstrated in the visualization above—between 2005 and 2010, a number of countries tipped towards Chinese influence, especially in Africa and Asia.
Over time, China’s dominance has grown dramatically. It’s no wonder then, that China and the U.S. have a contentious trade relationship themselves, as both nations battle it out for first place.
A Tale of Two Economies
The United States and China are competitors in many ways, but to be successful they must rely on each other for mutually beneficial trade. However, it’s also the major issue on which they are struggling to reach a common ground.
The U.S. has been vocal about negotiating more balanced trade agreements with China. In fact, a mid-2018 poll shows that 62% of Americans consider their trade relationship with China to be unfair.
Since 2018, both parties have faced a fraught relationship, imposing major tariffs on consumer and industrial goods—and retaliations are reaching greater and greater heights:
While a delicate truce has been reached at the moment, the trade war has caused a significant drag on global growth, and the World Bank estimates it will continue to have an effect into 2021.
At the same time, China’s sphere of influence continues to grow.
One Belt, One Road, One Trade Direction?
China seems to have a finger in every pie. The nation is financing a flurry of megaprojects across Asia and Africa—but one broader initiative stands above the rest.
China’s “One Belt, One Road” (OBOR) Initiative, planned for a 2049 completion, is advancing at a furious pace. In 2019 alone, Chinese companies signed contracts worth up to $128 billion to start Chinese large-scale infrastructure projects in various countries.
While building new highways and ports abroad is beneficial for Chinese financiers, OBOR is also about creating new markets and trade routes for Chinese goods in Asia. Recent research found that the OBOR program’s infrastructure expansion and logistics performance improvements led to positive effects on China’s exports.
Nevertheless, it’s clear the new infrastructure network is already transforming global trade, possibly cementing China’s position as the world’s major trading partner for years to come.
Thematic Investing: 3 Key Trends in Cybersecurity
Cyberattacks are becoming more frequent and sophisticated. Here’s what investors need to know about the future of cybersecurity.
Thematic Investing: 3 Key Trends in Cybersecurity
In 2020, the global cost of cybercrime was estimated to be around $945 billion, according to McAfee.
It’s likely even higher today, as multiple sources have recorded an increase in the frequency and sophistication of cyberattacks during the pandemic.
In this infographic from Global X ETFs, we highlight three major trends that are shaping the future of the cybersecurity industry that investors need to know.
Trend 1: Increasing Costs
Research from IBM determined that the average data breach cost businesses $4.2 million in 2021, up from $3.6 million in 2017. The following table breaks this figure into four components:
|Cost Component||Value ($)|
|Cost of lost business||$1.6M|
|Detection and escalation||$1.2M|
|Post breach response||$1.1M|
The greatest cost of a data breach is lost business, which results from system downtimes, reputational losses, and lost customers. Second is detection and escalation, including investigative activities, audit services, and communications to stakeholders.
Post breach response includes costs such as legal expenditures, issuing new accounts or credit cards (in the case of financial institutions), and other monitoring services. Lastly, notification refers to the cost of notifying regulators, stakeholders, and other third parties.
To stay ahead of these rising costs, businesses are placing more emphasis on cybersecurity. For example, Microsoft announced in September 2021 that it would quadruple its cybersecurity investments to $20 billion over the next five years.
Trend 2: Remote Work Opens New Vulnerabilities
According to IBM, companies that rely more on remote work experience greater losses from data breaches. For companies where 81 to 100% of employees were remote, the average cost of a data breach was $5.5 million (2021). This dropped to $3.7 million for companies that had under 10% of employees working from home.
A major reason for this gap is that work-from-home setups are typically less secure. Phishing attacks surged in 2021, taking advantage of the fact that many employees access corporate systems through their personal devices.
|Type of Attack||Number of attacks in 2020||Number of attacks in 2021||Growth (%)|
As detected by Trend Micro’s Cloud App Security.
Spam phishing refers to “fake” emails that trick users by impersonating company management. They can include malicious links that download ransomware onto the users device. Credential phishing is similar in concept, though the goal is to steal a person’s account credentials.
A tactic you may have seen before is the Amazon scam, where senders impersonate Amazon and convince users to update their payment methods. This strategy could also be used to gain access to a company’s internal systems.
Trend 3: AI Can Reduce the Cost of a Data Breach
AI-based cybersecurity can detect and respond to cyberattacks without any human intervention. When fully deployed, IBM measured a 20% reduction in the time it takes to identify and contain a breach. It also resulted in cost savings upwards of 60%.
A prominent user of AI-based cybersecurity is Google, which uses machine learning to detect phishing attacks within Gmail.
Machine learning helps Gmail block spam and phishing messages from showing up in your inbox with over 99.9% accuracy. This is huge, given that 50-70% of messages that Gmail receives are spam.
– Andy Wen, Google
As cybercrime escalates, Acumen Research and Consulting believes the market for AI-based security solutions will reach $134 billion by 2030, up from $15 billion in 2021.
Introducing the Global X Cybersecurity ETF
The Global X Cybersecurity ETF (Ticker: BUG) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index. See below for industry and country-level breakdowns, as of June 2022.
|Sector (By security type)||Weight|
|🇰🇷 South Korea||0.9%|
Totals may not equal 100% due to rounding.
Investors can use this passively managed solution to gain exposure to the rising adoption of cybersecurity technologies.
You may also like
Green2 days ago
Explained: The Relationship Between Climate Change and Wildfires
More carbon in the atmosphere is creating a hotter world—and gradually fueling both climate change and instances of wildfires.
Economy4 days ago
Visualized: The Value of U.S. Imports of Goods by State
U.S. goods imports were worth $2.8T in 2021. From east coast to west, this visualization breaks down imports on a state-by-state basis
Misc4 days ago
Sharpen Your Thinking with These 10 Powerful Cognitive Razors
Here are 10 razors, or rules of thumb, that help simplify decision-making, inspired by a list curated by the investor and thought leader Sahil Bloom.
Misc7 days ago
Brand Loyalty is Declining for Most Luxury Automakers
Brand loyalty has declined for most luxury automakers, but three brands—Tesla, Maserati, and Genesis—appear to have bucked the trend.
Visualizing Major Layoffs At U.S. Corporations
This infographic highlights the accelerating pace of layoffs so far in 2022, as businesses cut costs ahead of a potential recession.
Visualizing Major Layoffs at U.S. Corporations
Hiring freezes and layoffs are becoming more common in 2022, as U.S. businesses look to slash costs ahead of a possible recession.
Understandably, this has a lot of people worried. In June 2022, Insight Global found that 78% of American workers fear they will lose their job in the next recession. Additionally, 56% said they aren’t financially prepared, and 54% said they would take a pay cut to avoid being laid off.
In this infographic, we’ve visualized major layoffs announced in 2022 by publicly-traded U.S. corporations.
Note: Due to gaps in reporting, as well as the very large number of U.S. corporations, this list may not be comprehensive.
An Emerging Trend
Layoffs have surged considerably since April of this year. See the table below for high-profile instances of mass layoffs.
|JP Morgan Chase & Co.||Financial Services||~500||June|
Here’s a brief rundown of these layoffs, sorted by industry.
Ford has announced the biggest round of layoffs this year, totalling roughly 8,000 salaried employees. Many of these jobs are in Ford’s legacy combustion engine business. According to CEO Jim Farley, these cuts are necessary to fund the company’s transition to EVs.
We absolutely have too many people in some places, no doubt about it.
– Jim Farley, CEO, Ford
Speaking of EVs, Rivian laid off 840 employees in July, amounting to 6% of its total workforce. The EV startup pointed to inflation, rising interest rates, and increasing commodity prices as factors. The firm’s more established competitor, Tesla, cut 200 jobs from its autopilot division in the month prior.
Last but not least is online used car retailer, Carvana, which cut 2,500 jobs in May. The company experienced rapid growth during the pandemic, but has since fallen out of grace. Year-to-date, the company’s shares are down more than 80%.
Fearing an impending recession, Coinbase has shed 1,100 employees, or 18% of its total workforce. Interestingly, Coinbase does not have a physical headquarters, meaning the entire company operates remotely.
A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue declined significantly.
Brian Armstrong, CEO, Coinbase
Around the same time, JPMorgan Chase & Co. announced it would fire hundreds of home-lending employees. While an exact number isn’t available, we’ve estimated this to be around 500 jobs, based on the original Bloomberg article. Wells Fargo, another major U.S. bank, has also cut 197 jobs from its home mortgage division.
The primary reason for these cuts is rising mortgage rates, which are negatively impacting the demand for homes.
Within tech, Meta and Twitter are two of the most high profile companies to begin making layoffs. In Meta’s case, 350 custodial staff have been let go due to reduced usage of the company’s offices.
Many more cuts are expected, however, as Facebook recently reported its first revenue decline in 10 years. CEO Mark Zuckerberg has made it clear he expects the company to do more with fewer resources, and managers have been encouraged to report “low performers” for “failing the company”.
Realistically, there are probably a bunch of people at the company who shouldn’t be here.
– Mark Zuckerberg, CEO, Meta
Also in July, Twitter laid off 30% of its talent acquisition team. An exact number was not available, but the team was estimated to have less than 100 employees. The company has also enacted a hiring freeze as it stumbles through a botched acquisition by Elon Musk.
More Layoffs to Come…
Layoffs are expected to continue throughout the rest of this year, as metrics like consumer sentiment enter a decline. Rising interest rates, which make it more expensive for businesses to borrow money, are also having a negative impact on growth.
In fact just a few days ago, trading platform Robinhood announced it was letting go 23% of its staff. After accounting for its previous layoffs in April (9% of the workforce), it’s fair to estimate that this latest round will impact nearly 800 people.
Misc2 weeks ago
Visualizing Which Countries Drink the Most Beer
Demographics4 weeks ago
Ranked: The 20 Countries With the Fastest Declining Populations
Personal Finance2 weeks ago
Mapped: The Salary You Need to Buy a Home in 50 U.S. Cities
Energy3 weeks ago
Visualizing the World’s Largest Oil Producers
Energy2 weeks ago
Which Countries Produce the Most Natural Gas?
Agriculture4 weeks ago
Timeline: The Domestication of Animals
Business3 weeks ago
Ranked: The World’s Largest Container Shipping Companies
Misc7 days ago
Brand Loyalty is Declining for Most Luxury Automakers