U.S Exports to China
While U.S.-China relations in the political world remain tense, the business world is going gangbusters, according to the new trade report from the U.S.-China Business Council, in 2014, US exports to China totaled $120 billion, making it the third-largest export market for US goods behind Canada and Mexico, NAFTA Partners. Overall, 42 states experienced at least triple-digit export growth to China since 2005, and five states saw export growth of more than 500 percent over the same period.
China’s economy is undergoing important changes that have resulted in a slowdown in GDP and trade growth. As China’s market matures, that growth is likely to remain at lower rates than seen in past years. At the same time, China is seeking to rebalance its economy toward a consumer- driven growth model. With this shift, US companies are expected to have broader opportunities to export more goods and services to meet the needs of China’s growing middle class.
Exports play an essential role in the US economy and job growth. In 2014, US exports to China helped support a wide range of industries including transportation equipment, crop production, computers and electronics, and chemicals, along with export-related jobs in America’s port cities. Not only are exports vital to the health of US industry, global exports also supported 11.7 million US jobs in 2014, according to the US Department of Commerce.
China is a significant market for US exports, but the United States has a very small share of China’s overall market. China accounts for only 7 percent of total American exports, which represents less than 1 percent of U.S. GDP, and American multinational enterprises (MNEs) derive only 2 percent of their net income from China. The United States imported nearly $470 billion worth of goods from China in 2014, the majority of which were imports of consumer goods. The value of these imports was equivalent to about 12 percent of all the goods consumed in the country last year.
Although China accounts for only 7 percent of American exports, some countries have significant trade exposure to China. For example, Japan sends nearly 20 percent of its exports to China, which is equivalent to about 3 percent of Japanese GDP. To help boost US exports to China and regain lost market share, policymakers should increase funding for a number of US agencies that provide assistance to US industry, both by lowering market barriers and identifying opportunities for US goods and services abroad. Those agencies include the Office of the US Trade Representative, US Foreign Commercial Service, and the US Export‐Import Bank.
A second way in which the United States could be economically exposed to China is via the operations of American MNEs doing business in China. In 2012, the $330 billion worth of revenue that American MNEs generated in China produced $25 billion worth of net income. However, these totals represent only 5 percent of sales and 2 percent of net income that these MNEs produced via their foreign affiliates. In sum, American economic exposure to China is rather limited when viewed through the prisms of trade flows and MNE operations.
We at Mylo Trade support long-term business partnerships between American and Chinese firms. We’re also here to connect Chinese crop importers with the best U.S.crop exporters. To learn more about how to grow your U.S. agricultural export business in China, send us an email.