Sometimes the US – China relationship seems more like a Monet than a Rembrandt. The impression (no pun intended) that is most commonly portrayed is that China is stealing US jobs. However, the reality (pun intended) may not be so clear cut. Take for instance the following quote from the Wall Street Journal:
“Few politicians talk about it, but 406 out of 435 Congressional districts have seen triple-digit export growth to China from 2000-2007.”
That is pretty substantial growth in all but 29 of the Congressional districts. Some speculate that over the next few years that may increase as a result of the recent and tragic disasters in the Sichuan province.
“U.S. exports to China are growing five times faster than any other export market. This is less a function of the falling dollar and more of rising Chinese demand for U.S. products.”
Why the interest in the US? Doesn’t China have the capability to manufacture everything on its own?
“Put simply, they need what we make – from chemicals and components to turbines and telecommunications, from drugs and medical devices to sewage and sanitation equipment. If a product requires modern technology and precise engineering, chances are, China needs it.”
I guess that has to make the US feel good. Everyone likes to feel needed and US manufacturing is definitely needed. So don’t believe everything negative you hear about US manufacturing and the US economy.
“If the International Monetary Fund is right and the U.S. economy is slipping into a recession that will ripple out into the global economy, then that ripple will stop at China’s shore. China’s demand will help absorb the shock of our solvency crisis.”
So the reality is that we may have a friend in China.
Mel Ostrander says
Another story about China ‘bailing us out’ with expanded trade – triple digit increases!
Anyone looking at the other side of this coin – imports? Even with our grealty increased exports to China, our trade deficit swells to new heights each passing year.
In 1985 our trade deficit with China was $6 billion. In 1995, our deficit was $33.8 billion. In 2004, the deficit was $162 billion! Sign me up – the Chinese are coming to save the day.
Would we rather have 5% of the Chinese import market to the USA (2004 total $196.7 billion) or 25% of the export market to China (2004 total $34.7 billion)?
They are throwing us a very small bone and we are falling over ourselves with glee to get it.
Level the playing field (stop Chinese business subsidies; normalize their currency) and let’s see how a free market really behaves.
Joe says
You can sugar coat it any way you please but the bottom line is a titanic size trade deficit with China that ain’t shrinking. See 2007 figures:
http://www.census.gov/foreign-trade/balance/c5700.html#2007
-$256 billion
The only thing that will staunch the bleeding is further erosion in the dollar which I believe where this country is inevitably heading.
Mark Graban says
Beware of data without context. “Triple digit improvement” can mean from $10 to $20.
Percentages certainly don’t give the full picture. We have an enormous trade deficit with China and the rest of the world. China is financing country’s debt… that’s a dangerous situation.
Ken says
“…financing this country’s debt”… that’s a common misnomer. It’s just as accurate to say “investing in America.” Which is a bad thing? I’m a shareholder of Microsoft, so I’m financing their debt… but is that a negative for Microsoft? Nope. And I wouldn’t do it if it was a bad investment.
Mark Graban says
Are we ever planning on reducing our deficit or paying back the Chinese (or others)?
Sure doesn’t seem like it.
It’s more like propping us up than it is investing with the expectation of getting a return, isn’t it?
If I give you $50 and you’re going to pay me back $50 (or $55 if I’m a bank), that’s investment.
Giving you $50 without an expectation of getting back is charity. Or I’m a jerk and I’m going to hold that over your head politically.
Ken says
But they ARE getting their money back. Federal debt pays interest. When we talk about China holding “vast” amounts of U.S. debt (but it’s ok if it’s the UK or Canada, right?), they always have the option of putting their money elsewhere. But they choose to get low single digit returns. And even then our debt as a % of GDP is low compared to most countries.