Trading with China
Glenn Reynolds links to good news about trade — exports are growing at a strong clip. According to Reuters: U.S. exports leapt four percent — the highest monthly increase since October 1996 — to a record $92.4 billion, while imports rose 1.6 percent to a record $134.5 billion. The politically sensitive trade gap with China ...
Glenn Reynolds links to good news about trade -- exports are growing at a strong clip. According to Reuters:
Glenn Reynolds links to good news about trade — exports are growing at a strong clip. According to Reuters:
U.S. exports leapt four percent — the highest monthly increase since October 1996 — to a record $92.4 billion, while imports rose 1.6 percent to a record $134.5 billion. The politically sensitive trade gap with China fell nearly 28 percent in February as imports from that country slipped to $11.3 billion, the lowest level in nearly a year, and exports to China rose 17 percent to $3.0 billion. The lower dollar appeared to help all categories of exports, as shipments of industrial supplies and materials and autos and auto parts both set records. Exports of consumer goods were only slightly below the record set in November and exports of capital goods, such as aircraft and industrial machines, were the highest since May 2001. Exports of services, which include travel, also set a record. (emphasis added)
So much for being inundated with a tidal wave of services imports due to outsourcing. [But what about China? Surely their undervaluation of the renminbi is leading them to run such whopping trade surpluses?–ed.] Actually, as Nicholas Lardy pointed out last month in Congressional testimony, this narrative doesn’t hold up:
A reader of the [AFL-CIO’s] petition [for section 301 trade sanctions to be applied against China] might gain the impression that Chinese labor costs are so low that foreign goods could not be competitive in China’s market. That impression would be fundamentally mistaken. Over the past decade, Chinese imports quadrupled from $104 billion in 1993 to $413 billion last year. Since China joined the WTO in late 2001, its imports have increased by 70 percent. Last year alone, China’s imports rose by 40 percent, and China surpassed Japan to become the world’s third largest importing country. China’s global trade surplus last year was only $25 billion. This surplus was only 1.8 percent of China’s gross domestic product, one of the lowest ratios in Asia. In the first two months of this year, imports rose 42 percent over the same period in 2003, and China incurred a trade deficit of almost $8 billion. China’s import growth has been so rapid that it has become a major source of economic growth in Japan, Korea, Taiwan, and countries in Southeast Asia. China is also far and away the fastest growing among the large export markets of US firms. The petition makes no reference to the creation of jobs in US manufacturing as a result of our growing exports to China.
Read the whole thing. This page has some relevant charts and graphs.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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