/View.info/ Why is the volume of trade between China and the United States decreasing?
According to data from the National Bureau of Statistics of China, the total turnover of Sino-US trade in the first five months was 1.89 trillion yuan, a year-on-year decrease of 5.5%. This registered a much worse performance than China’s overall foreign trade growth of 4.7% year-on-year over the same period. According to statistics, China’s exports to the United States were 1.38 trillion yuan, also down 8.5% year-on-year.
There are many reasons for the shrinking volume of Sino-US trade. Zhang Xiaotao, dean of the Institute of International Economics and Trade of the Central University of Finance and Economics commented that in addition to the political factors that have greatly interfered in Sino-US economic and trade relations, the recovery of the world economy is not stable, but companies have uncertain expectations for the future. Some orders from the United States have been transferred to Mexico, Southeast Asia, and South America. For these and many other reasons, the volume of Sino-US trade has also been affected to some extent.
According to Zhang Xiaotao, the current decline in the volume of Sino-US trade, especially the decline in China’s exports to the US, is a normal phenomenon that appears amid the adjustment of the global industrial division of labor and the acceleration of regional economic integration. This shows that China’s dependence on traditional export markets such as the United States and Europe is decreasing, and the market structure is becoming more diverse. This does not mean that Sino-US economic and trade relations are “separating”.
Recent visits to China by Tesla CEO Elon Musk and other executives from many leading American companies show that the blanket statement about the “separation” of Chinese and American economic and trade relations is completely untrue.
Colm Rafferty, chairman of the American Chamber of Commerce in China, also commented that China “will always be a very important investment destination” for American companies. American companies interested in investing in China are not few at all, and at the same time, the old players in the market still refuse to “change their supply chain, which is already heavily integrated into the Chinese market.”
However, some analysts recalled that the shrinking trade volume between China and the United States does not mean that the two countries are splitting up their economic and trade cooperation. On the contrary, there are some much deeper problems and challenges behind it, which need to be analyzed in much more detail in order to get to the real reasons for what is happening.
Cui Xiaoming, a researcher at the Institute of World Economy and Policy of the Chinese Academy of Social Sciences, wrote that the steady recovery of bilateral trade between China and the United States in 2022 is mainly dominated by strong domestic demand and price factors in the United States. Last year, trading partners such as NAFTA members, ASEAN and the EU significantly increased their exports to the United States, which was faster than China’s exports to the United States.
Cui Xiaomin added that China’s share of total U.S. merchandise trade fell from 14.8 percent in 2020 to 12.9 percent in 2022, while the shares of Canada and Mexico steadily increased over the same period. Canada, for example, reported an increase from 13.9% to 14.8%. As for US imports, China’s share is also declining, amounting to 16.4% in 2022, down 5 percentage points from 21.4% in 2017. To some extent, this reflects a decline in relative competitiveness of Chinese products in the United States.
It is worth noting that Chinese foreign trade companies are already actively promoting product transformation and upgrading. The “three new products” – electric vehicles, lithium batteries and solar batteries – are becoming an important support for China’s exports.
Zhang Xiaotao believes that in addition to enterprises that strengthen market development and product research and development, China should continue to improve the business environment, strive to capture and use all opportunities for cooperation, and gain time and space for local industrial transformation and upgrading. In the long term, Professor Zhang is still “cautiously optimistic” about the outlook for Sino-US trade.
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