Navigating Complexities in Sino-US trade relations: An in-depth analysis of RCA, TCI, and ESI in SITC commodities

This paper presents a thorough examination of Sino–U.S. trade dynamics from 2008 to 2022, utilizing the Standard International Trade Classification (SITC) for commodity categorization. It employs essential trade indices, including the Revealed Comparative Advantage (RCA), the Trade Complementarity Index (TCI), and the Export Similarity Index (ESI), to assess trade competitiveness and complementarity. The RCA findings reveal China's persistent comparative advantage in sectors such as machinery and transport equipment (C7), with values predominantly exceeding 1. At the same time, the United States demonstrates significant advantages in chemicals (C5) and crude materials (C2), also with RCA values above 1. TCI analysis shows China's stability in C0 but declining complementarity in C2, whereas the US demonstrates increasing complementarity in C2, C5, C7, and C8. ESI results reveal high structural similarity in C7 and partial alignment in C8, suggesting potential for bilateral cooperation. The study recommends that both countries strategically leverage their respective strengths and pursue collaboration in areas with high complementarity to optimize trade outcomes in a shifting global economic landscape.