Here’s a data point you won’t hear discussed very often: If the last few months of this year hold to trend, the US will have imported more goods from China in 2022 than in any year prior.
The next chunk of data will come Dec. 6 with the US release of October trade numbers, and there’s still time for the trend to shift— especially with China’s current Covid lockdown travails. But what’s already in the books is clear. In the first nine months of the year, the US imported $418 billion in goods from China, or $23.7 billion more than it did in the same period of 2018, the current record holder. That’s worth thinking about given that, in the six years since Donald Trump launched his trade assault on China, the dominant story has been the supposed decoupling of the world’s two largest economies. The prevailing narrative of late suggests we’re living through the unwinding of an era of hyper-globalization, and that the world is busy reorganizing itself around geopolitical poles centered on Washington and Beijing. But the trade data is a reminder that rhetoric and even policy don’t always reflect the global economy.
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There’s no doubt we’ve been going through a prickly period in the US-China diplomatic and trade relationships, and that there are more hawks than doves these days on both sides. But for all the pandemic-driven talk of shifting supply chains away from China and reshoring factories, the value of Chinese goods purchased by the US is higher than it’s ever been. (The value of US exports to China this year has also been near record levels. In the first nine months of 2022, US companies sent $108.8 billion in goods to China versus $105.6 billion in the same period of 2021, the last record year.)
That surge in US imports has come despite the Trump tariffs that were meant to rewrite the economic relationship, and without any apparent shock to US employment. All of this is at odds with what protectionists have been arguing for years. Indeed, based on the November jobs numbers, the US has managed to add a whopping 379,000 manufacturing positions in 2022 despite all of those Chinese imports . There are at least three things to take away from all of this: 1. The trade relationship with China remains America’s largest by some distance. Imports from China accounted for 17% of total US imports through September of this year. No single country comes close, though Canada and Mexico together accounted for a bigger share of total US trade. For America, this state of affairs is kind of a big deal— and a major foreign policy complication— given that China is seen as its main economic and geopolitical rival. 2. The pandemic has made all data messy, so we should be cautious. It’s not just inflation at 40-year highs and the impact on the value of imports that’s affecting the data. American retailers have tended to over-order from China during the pandemic, which likely affected the trade figures as well. It could be that, over the coming years, the change in the relationship everyone is talking about will slowly be reflected in the data. 3. Sometimes it’s worth being wary of rhetoric and narratives. An economy is its people, and people often confound the intentions and expectations of policymakers. Read More at https://www.bloomberg.com/news/newsletters/2022-12-03/a-record-year-for-us-china-trade-new-economy-saturday
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