(Forbes) During an election campaign, two things are guaranteed. Parties will discuss how they are more righteous than their rivals. And they will show voters how they’ll punch China’s lights out faster than their opponent.|
But, from an economic standpoint, hating China is futile. In fact, if China grows at a clip of 7% or more for the next five years it could outstrip Mexico as the United States’ No. 2 trading partner. Right now, China is No. 3 and far behind Mexico, which enjoys a free trade agreement with the U.S.
Biggest Buyers Of U.S. Products
Country Imports Growth Avg. Annual Growth
Canada $263 3.1% 7.0%
Mexico $208.4 9.2% 10.1%
China/HKG $144.4 6.0% 15.6%
Japan $66.8 6.3% 4.0%
UK $48.8 -3.9% 5.9%
Germany $46.2 -0.9% 7.1%
Brazil $42.5 1.9% 17.9%
So. Korea $40.1 -2.5% 8.8%
Netherlands $37.1 -1.5% 8.5%
Singapore $29.1 -0.6% 8.2%
Source: U.S. China Business Council. Figures estimated by The Trade Partnership. Figures in billions of dollars.
Meanwhile, China imported $108.6 billion in U.S. goods last year, up from $102 billion in 2011 and $89.5 billion in 2010. By comparison, Mexico imported $208 billion of U.S. goods and services in 2012.
China has a way to go to catch up. Yet, China is a different animal than Mexico. Mexico is not going through a structural shift of being an export economy morphing to a consumer-focused one. China is. And when China turns inward, it means a stronger currency, higher incomes, and more consumer spending. At least, in theory. Imports this year have slowed due to the general weakness in the Chinese economy. But overall, the richer-China theory has proven correct. Consumers are demanding more goods from the U.S. and corporations there are upsizing, buying U.S. capital goods.
The U.S. China trade deficit is still getting bigger. But that’s not necessarily China’s fault. They are buying more from the us than ever before.
In the decade between 2003 and 2012, total U.S. exports to China rose 294%, an increase of nearly $81 billion, according to The Trade Partnership data compiled by the U.S. China Business Council.
Many exports to Hong Kong are destined for China’s markets. Together, U.S. exports to Hong Kong and China reached $144.4 billion in 2012. The combined U.S. exports to the two destinations grew by 26% from 2010-2012, and posted a 6% gain from 2011.
While it’s true, most of the stuff we export to China comes out of a farm in the bread basket states (China bought $21 billion worth of agricultural commodities, mainly soybeans, from the U.S. last year), the country also spent $16 billion on transportation equipment, $14 billion on computers and electronics and $12 billion on chemicals.
Republican & Democrats Should Embrace China
Over the last decade, the growth in America exports to China was broad based and widely shared among congressional districts around the country. In 2012, 262 congressional districts (60%) increased exports to China, the U.S. China Business Council (USCBC) said in a report released Thursday. Between 2003 and 2012, 401 congressional districts (92% of them) experienced triple-digit growth in their exports to China.
As this trend continues, hating China will be harder for politicians. It will be like a southern state congressman voting to slash the defense budget. You can’t say China is a currency manipulator killing American jobs if they just spent a few million helping your state hire a few hundred oil workers.
Out of 435 congressional districts, 249 of them had higher growth in exports to China last year than any other market in the world, according to the USCBC’s “Congressional District Exports to China” report.
China wants what we produce. But they should want even more of it. The U.S. lags behind the Europeans and Japanese in the Chinese market.
The USCBC, a lobby firm, said in its report Thursday that congress should consider developing a new U.S. trade objective to reclaim a 10% share of China’s imports by 2015. Right now it is 7%.
Regaining a 10% share of China’s import market will help U.S. companies build a presence in China and boost overall U.S. sales.
For China, increasing imports remains a primary objective. In May 2012, the State Council issued guidelines to increase imports by “further improving the structure of imports and … importing more advanced technologies.” The United States needs to be on the forefront of this, USCBC says. The firm represents the interest of the major multinationals selling to China. Still, who in China would want to partner with a state whose leaders keep talking about how horrible they are? Eventually, politicians will get it.