A Look at U.S.-China Trade

The latest trade data shows that US exports to China fell slightly in April over March. However imports were up. Imports have picked up since reaching lows in February. The trade deficit with China continues to still be high since the US imports more than four times what it exports to China. US exports to China is down 15.6% year-over-year through April this year.Though China’s imports are up through May, it has not turned into higher export opportunities for US companies.

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Data Source: Census.gov

From a historical perspective, both imports from China and exports to China from the US have to rise in sync with each other. If the US exports continues to be flat-to-down and imports from China improves then the trade deficit will grow more and it will also imply that the Chinese are importing goods from other countries or sourcing goods from domestic producers. Given the current state of the US economy and the 9.5% official unemployment rate reached today, the US will import less from China.This may lead to further social unrest in China unless China is able to stimulate domestic consumption.

Disclosure: No position

Comments

[Dave Wrixon:]

I am a little puzzled why America sees this as China's problem.

Jul 05 07:24 AM

[Ferdinand E...:]

"Further social unrest in China." There is social unrest almost everywhere thanks to the partial global meltdown, so why try to make a big thing out of the situation in China.

Jul 05 09:28 AM

[User 143167:]

Social unrest in China?? You guys have no idea about China. You should go down here and look around before making such a judgement.

The consumption in China went up 15% YoY YTD. Investment up 33%. Car sales up 20%. House sales up 50%. Good indication for social unrest, uhn?

Jul 05 10:06 AM

[Old Trader:]

User,

Its my understanding that a lot of China's stimulus has ended up in their stock and real estate markets, giving rise to concerns of a bubble occuring there. This would account for the percentage increase figures you cite for "investment" and "housing". The auto sales received help from government incentives specifically targeted at small, fuel efficient vehicles.

While its true the Chinese "middle class" is growing, its still vastly outnumbered by the mostly rural lower class, which is where "unrest" often foments.

Please don't misunderstand, I'm one of those who believe that China will become an increasingly large force on the global stage, but the road is long, and rather bumpy.

On Jul 05 10:06 AM User 143167 wrote:

> Social unrest in China?? You guys have no idea about China. You should
> go down here and look around before making such a judgement.
>
> The consumption in China went up 15% YoY YTD. Investment up 33%.
> Car sales up 20%. House sales up 50%. Good indication for social
> unrest, uhn?

Jul 05 04:22 PM

[Henry Buttal:]

User 143167,

Thanks for adding the comments. I assume from what you said you are actually in China.

What do those percentage numbers translate into as units? I know, owning shares of China Mobile, I always blink we I see the numbers; in the case of China Mobile, they have more subscribers than there are people in the U.S.

Is there enough exports to support healthy internal growth in China?

Jul 05 07:58 PM

[Spook:]

I agree, its a long bumpy and winding road ahead.


> Please don't misunderstand, I'm one of those who believe that China will become an increasingly large force on the global stage, but the road is long, and rather bumpy.

Jul 05 11:26 PM

[Spook:]

Nothing to export, perhaps those who are heavily involve in China market must have heard the "M Project".

Every growth opportunity right now in China are based on new design, development for China market, low cost, decent quality and with huge volume.

If US is going to expect to export its way out of the recession, it will need to adopt in the manner how Chinese market work. Taiwanese manufacturer are already in this M Project bandwagon.


> Thanks for adding the comments. I assume from what you said you are
> actually in China.
>
> What do those percentage numbers translate into as units? I know,
> owning shares of China Mobile, I always blink we I see the numbers;
> in the case of China Mobile, they have more subscribers than there
> are people in the U.S.
>
> Is there enough exports to support healthy internal growth in China?

Jul 05 11:30 PM

[Spook:]

Agree with David, not a China problem, more with US long term problem.


> I am a little puzzled why America sees this as China's problem.

Jul 05 11:33 PM

[User 143167:]

Trader,

The bubble is real but exaggerated. The stock market might go up or down, but what you can't neglect is that the total savings in China are over 40trllion RMB, equivalent to over $6trillion. You can't dismiss that thing just as something like bubble. They have the money, and they have the manufacturing capacity. What they only need to do is just putting the right resources at the right places. Exporting to the America, as far as I see, is wasting resources for Chinese. What the hell should they export those goods for? Exchange for the IOUs that US treasury or the Fed can print unlimited at their backyards?

I think this crisis actually wakes up the Chinese. Hey, you guys do have the money and resources, why not just build up an economy on your own consumptions? Is it such a hard thing to consume when you actually have the money to do it?

I would like to tell you that it is deadly wrong to thing Chinese economy will collapse without foreign trades. It might get hurt for a while, but the Chinese managed to do that in the history, and they will be able to do that again.

I know China have many low income or undevelopped areas, but don't you think that is exactly what they could spend the money he earned for?

The road will be bumpy as you said, but I don't see the social riots the author talked about. There are three virtues of common Chinese that will make that country among the strongest countries like most of the time in human civilization history: prudent, disciplined, and hard working.

Jul 06 12:06 PM

[coreopsis:]

The US is in deep denial. The diminution in US life over the next few years will make the current situation seem halcyon by comparison. The fact that US zealotry focuses on the 'enemy' without (read China) -- and ignores the rotten core of US capitalism, a system run for those with capital and the ability to play sophisticated speculative games -- this is very clear. The BRICs, among other nations, all see the impending house of cards that is the US economic (and social) system.

Violence will emerge as the solution to many people (including perhaps a few of the demented posters on the China blogs of SA...such as SR) and there will blood in the streets of America again.

Who will triumph? China, Russia, Brazil, to a lesser extent, India and Mexico.

The nasty accusations against the emerging world (especially China) for exporting goods (aka mercantilism) and pollution will fall on deaf ears.

The world that is today...is the product of the American system, and that means its pollution, violence, destruction, pornography and hatred of the 'other'.

Jul 06 07:15 PM

[Sober Realist:]

Does anybody vote positive on your comments beside yourself?


On Jul 06 07:15 PM coreopsis wrote:

> The US is in deep denial. The diminution in US life over the next
> few years will make the current situation seem halcyon by comparison.
> The fact that US zealotry focuses on the 'enemy' without (read China)
> -- and ignores the rotten core of US capitalism, a system run for
> those with capital and the ability to play sophisticated speculative
> games -- this is very clear. The BRICs, among other nations, all
> see the impending house of cards that is the US economic (and social)
> system.
>
> Violence will emerge as the solution to many people (including perhaps
> a few of the demented posters on the China blogs of SA...such as
> SR) and there will blood in the streets of America again.
>
> Who will triumph? China, Russia, Brazil, to a lesser extent, India
> and Mexico.
>
> The nasty accusations against the emerging world (especially China)
> for exporting goods (aka mercantilism) and pollution will fall on
> deaf ears.
>
> The world that is today...is the product of the American system,
> and that means its pollution, violence, destruction, pornography
> and hatred of the 'other'.

Jul 08 03:25 PM