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ONE
hopes, as we always do when China's leaders
are restive and the Excited States of America
reciprocates in kind, that all will calm
so we shall get back to business.
And
what a business it is! The US-China trade
has always been a plethora of amazing numbers,
so much so that we have become blas? hardly
heeding the last breathless statistical
recitation, however amazing.
But
one can still be astonished by the scale
of the growth. A few years ago, When we
thought it was big, enormous in fact, it
is surprising to what extent those once
impressive figures have been dwarfed by
the constantly rising volumes since then.
For
instance, US goods exports to China in 2013
were valued at US$122.1 billion, up 10.4
per cent ($11.5 billion) from 2012, and
that figure was up 330 per cent from 2003,
and 536 per cent since 2001 (when China
entered the WTO).
That
statistical nugget is an eye-opener. It
reveals that from 2001 - not very long ago
- when we became starry-eyed about trade
volumes, they have increased more than five
fold.
China
is also America's second biggest goods trading
partner - still second to Canada - with
$562 billion in a total two-way flow in
2013. Exports came to $122 billion while
imports hit $440 billion.
US
trade in private services with China totalled
$43 billion in 2012 (latest data) with services
exports at $30 billion while services imports
came to $13 billion.
One
remarkable area of growth has been in US
goods exports to China in 2013 - up 10.4
per cent to $122.1 billion year on year.
To put that in perspective, consider that
that figure was up 330 per cent from 2003
- soaring 536 per cent since 2001 when China
entered the WTO. US exports to China accounted
for 7.7 per cent of overall US exports in
2013.
Once
upon a time the mark of a lesser developed
economy what its role as an export agricultural
producer. No longer. These days, top US
exports are miscellaneous grain, seed, fruit,
soybeans ($13.8 billion). Then come the
more traditional rich country exports -
aircraft ($12.6 billion), machinery ($12.2
billion), electrical machinery ($11.4 billion),
and vehicles ($10.3 billion).
US
farm exports to China totalled $25.9 billion
in 2013, America's biggest agricultural
market worldwide.
Less
surprisingly, China is America's biggest
supplier of imported goods, but only increasing
3.5 per cent year on year in trade value
to $440.4 billion in 2013. But that was
still up 189 per cent on 2003 and 331 per
cent on 2001. US imports from China accounted
for 19.4 per cent of overall US imports
in 2013.
Top
five import categories were electrical machinery
($117.5 billion), machinery ($100.4 billion),
furniture and bedding ($24.1 billion), toys
and sports equipment ($21.7 billion), and
footwear ($17 billion).
Sadly
the US-China trade, while deep and wide,
is fraught with prickly disputes with most
complaints arising from the US side regarding
trade. Google for "China complaints
against the US trade practices and one mostly
finds more American charges against Chinese
trade practices.
There
has been a decade-long currency complaint,
more muted today given the strength of the
yuan. But various authorities - even American
experts - have found little evidence of
China manipulating the value of its currency
while at the same time disapproving of its
refusal to allow it to float and accept
market rates.
No,
the big issue today is trade finance in
which few hands are clean. The Office of
the US Trade Representative's big problem
with China are the subsidies it offers its
exporters.
The
US brought a challenge before the World
Trade Organisation (WTO) against prohibited
export subsidies China provided for cars
and autoparts manufacturers under the "National
Auto and Auto Parts Export Base" programme".
After
requesting consultations with the opaque
Chinese bureaucracy, the Americans discovered
another similar scheme called "Demonstration
Bases", which provided allegedly prohibited
export subsidies to many other industries.
Said
the US Trade Representative: "China
appears to be providing export subsidies
under the Demonstration Bases-Common Service
Platform programme. Export subsidies provide
an unfair advantage to a vast array of Chinese
exporters and are expressly prohibited under
WTO rules."
But
because of China's lack of transparency,
it was difficult to assess the exact extent
of the subsidies provided to enterprises
in each of the 179 Demonstration Bases in
China. The total value of the subsidies
provided per base appears to vary depending
on the industry, size, and location of the
base, but there is evidence that certain
Demonstration Base enterprises have received
at least $635,000 worth of benefits annually.
All
this, while vexatious, it is still within
the usual realm of argey-bargey trade talks,
charges and counter charges or fiddles and
evasions of duties, countervailing and otherwise.
What
is more ominous are unpleasant, even dangerous
paramilitary developments of land grabs
on the high seas and territorial claims
few recognise and many dispute and an accompanying
build up of armaments.
China's
building of a blue water navy, its modernising
of the army and air force, and evidence
of cyber espionage and its assumption of
control over the South China Seas, has worried
neighbours and rattled the United States.
It has even aroused suggestions that Japan
should seriously rearm itself to against
regional aggression.
Recent
news has US agencies placing technical centres
in China associated with the massive Tianhe-2
supercomputer on a list of entities acting
against US national security or foreign-policy
interests.
This
comes in a US Commerce Department notice
that said that Tianhe-2 and predecessor
Tianhe-1 "are believed to be used in
nuclear explosive activities." The
move, says The Wall Street Journal, is a
blow for hardware suppliers like Intel,
which was denied an export licence late
last fall to supply the supercomputer projects
with more chips.
With
the passage of time it is hoped that the
new Beijing leadership will turn from haughty
pursuits of showing who's boss and the America
will stand down from the parapets where
we again find it - bayonets fixed in full
battle array.
One
can only hope that all sides will ease tensions
and allow a robust trade grow to its full
potential to the benefit of China and the
US and to the world as a whole. This is
too good a business to mess up!
To
trade's increase!
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