Despite the US trade deficit with China, that nation remains a critical trade partner with the United States. Nevertheless, the trade deficit, pegged at US$365.7 billion in 2015, remains a hot button particularly given currency debates regarding China’s yuan and the Trans-Pacific Partnership (TPP) free trade agreement, to say nothing of the fact this is an election year in the United States.
Up slightly from 2014’s deficit of US$343 billion, 2015’s total is a record high. The trade deficit exists because of a trade imbalance: US exports to China in 2015 were only US$116.2 billion, while imports from China hit a new record of US$481.9 billion. The United States imports consumer electronics, clothing and machinery from China.
There are many arguments to be made on both sides regarding the trade deficit, one being market conditions.
Regardless of this, China – despite its current economic slowdown – remains a very lucrative market for US companies when compared to other parts of the globe. China particularly continues to be an important contributor to US economic growth, a fact of which those in the logistics industry are well aware.
“At the end of the day China still produces most of what we consume in the United States,” says Howard Finkel, vice president of COSCO Americas Inc. “Unless the global economy totally collapses, the products will continue to be made in China and the US will continue to consume them. The situation is concerning, but it’s not critical.”
As a result, China is the third-largest export market for US goods behind Canada and Mexico. A large portion of US exports to China encompass raw materials that are used in China to assemble goods.
Though the value of US exports to China last year was largely unchanged from 2013, China’s market continues to be a top destination for US goods. On average, US exports to China grew by nearly 13% annually over the past 10 years.
Comparatively, US exports to Mexico, Germany, and the United Kingdom averaged 8.1%, 4.3% and 3.6% annual growth, respectively.
Over the last decade, US exports to China have grown faster than exports to any other major US trading partner, reports the US-China Business Council (USCBC). In its analysis of US exports to China between 2005-2104, the USCBC found that US exports to China increased 198%.
“That is greater than growth to any of the other top 10 US export markets, including the two largest US trading partners, Canada (47% growth) and Mexico (102% growth),” the report states.
According to USCBC, however, the United States ranks fourth as China’s largest source of imports. The European Union, South Korea, and Japan all export more goods to China than the United States.
The United States overtook Taiwan in 2014 as China’s fourth-largest source of imports, after falling behind it in 2013. Though China’s imports of US goods grew by around 4% from 2013-2014, other major trading partners like the EU saw 11% growth over the same period.
In analyzing US exports to China on a state-by-state basis, USCBC found that China was among the top three export markets for 39 states in 2014. That includes states that are usually not associated with strong China trade ties, including Minnesota, Michigan, New York, Alabama, Ohio, and South Carolina. In 2014, 31 states exported more than US$1 billion to China.
Washington, in the northwest US, was the leading state, exporting US$15.3 billion in 2014, the latest date for which figures are available. California came in second with US$14.9 billion in exports that year; Texas third with US$10.3 billion, and Illinois fourth with US$6.0 billion.
Washington is the third-largest exporter of food and agriculture products in the United States with Japan, Canada, China/Hong Kong, the Philippines and South Korea being the top five markets. About two-thirds of all Washington agricultural exports are destined for Asia. Ships departing Washington seaports can arrive up to two days sooner in key ports such as Tokyo and Busan. Freight flown from Seattle Tacoma International Airport (SEA) can arrive in Beijing in less than 15 hours.
The Ports of Seattle and Tacoma play a big role in ocean trade. Combined, the ports are the third-largest container gateway in North America and have excellent rail, road, and air links.
Primary markets for the Ports of Seattle and Tacoma, which now operate as the Northwest Seaport Alliance (NWSA), are Asia and Alaska. The NWSA is in the midst of upgrading two container terminals – one in each harbour – to handle two 18,000 TEU ships simultaneously.
“With a wider array of facilities to offer, we may have the ability to repurpose some terminals to meet demand for non-container cargoes,” says Tara Mattina, NWSA spokesperson.
Washington’s Port of Grays Harbor is home to Westport Marina, a facility that is the largest commercial seafood landing port in Washington State. Besides seafood, the port is a leading exporter of American grown soybean meal.
While larger states like Texas and California saw significant growth in exports to China, smaller states benefited, too. Delaware, Kentucky, West Virginia, and Nevada all experienced more than a 300% growth in exports over the past decade.
By Karen E. Thuermer
Correspondent | Washington
