China Trade Now Bigger than US

Chinese state media reports foreign trade surged in January. Exports jumped 25%, and imports increased 28%. The growth was bigger than the increase seen in December, from Xinhua:

“A lower comparative base last year caused by fewer working days has helped push up the growth rate this year,” said Li Jian, a foreign trade expert from a research institute at the Ministry of Commerce (MOC).

Imports continued a recovering trend due to a warming domestic market. Imports of iron ores,coal and steel, which are mainly consumed by domestic infrastructure projects, increased sharply last month, said Chen Hufei, a researcher at the Bank of Communications.

Friday’s data showed that China’s foreign trade with the European Union rose 10.5 percent year on year last month to stand at 47.14 billion U.S. dollars.

Trade with the United States increased 23.4 percent to $43.72 billion. Trade with the Association of Southeast Asian Nations grew 42.9 percent to reach $36.99billion. Trade between China’s mainland and Hong Kong surged 83 percent to $33.4 billion.

According to The Telegraph, China has surpassed the US to become the world’s biggest trading nation:

The total value of US exports and imports in 2012 was $3.82 trillion (£2.4 trillion), the US Commerce Department has revealed. China’s customs administration has already announced that the country’s total trade last year was worth $3.87 trillion.

Not only has China managed to post a larger total trading figure, but the breakdown of imports compared with exports also makes for favourable reading in Beijing. China had a full-year trade surplus of $231.1bn with the US posting a total 2012 trade deficit of $727.9bn.

However, activity across the Chinese economy was impressive, with sales of passenger cars over the month soared to their highest ever. China’s auto sales jumped 46.4pc compared with January 2012 to a record monthly high of 2.03m units, the China Association of Automobile Manufacturers (CAAM) said. Vehicle output also hit a new monthly high, surging 51.17pc to 1.96m units.

French bank Société Générale said last month there still is a chance of a “hard landing,” with growth dropping below 6pc, which would be dangerously low for China.

While China boosts its foreign trade, analysts say China’s growing influence could be a threat, from Bloomberg:

China’s growing influence in global commerce threatens to disrupt regional trading blocs as it becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France, estimated Goldman Sachs Group Inc.’s Jim O’Neill.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

“It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,”Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. The increase isn’t all the result of an undervalued yuan fueling an export boom, as Chinese imports have grown more rapidly than exports since 2007, he said.

“One way or another we have to get China more involved in the global organizations of today and the future despite some of their own reluctance,” O’Neill said, mentioning China’s inclusion in the IMF’s Special Drawing Rights currency basket. “To not have China more symbolically and more importantly actually central to all these things is just increasingly silly.”

CDT previously reported on the manufacturing shift that had certain products made in the US but sold in China. Reuters reports although imports from China to the US hit a record high last year, America’s exports to China also increased:

Prices for U.S. stocks rose as investors were impressed by a batch of strong trade data, which included readings showing stronger exports and imports by China during January as well as the U.S. figures for December. Prices for U.S. government debt fell.

While the overall deficit shrank last year, it grew with China, raising the hackles of U.S. manufacturers who feel Beijing gives its exporters an unfair edge by keeping its currency undervalued.

America’s December trade deficit with China for goods, which was not seasonally adjusted, narrowed by $4.5 billion on a drop in imports.

Read more about trade in China, via CDT.

February 10, 2013 9:56 AM
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