Economic Watch: Why is the trade volume between China and the United States shrinking?

(Economic Watch) Why has the trade volume between China and the United States shrunk?

Beijing, 6 Jun (ZXS) -- According to data from the General Administration of Customs of China, the total value of Sino-US trade in the first five months was 8.5 trillion yuan (RMB, the same below), down 1.89 percent year-on-year, far inferior to the overall performance of China's foreign trade growth of 5.5 percent in the same period. Among them, China's exports to the United States were 4.7 trillion yuan, down 1.38% year-on-year.

The shrinking trade volume between China and the United States is due to many reasons. Zhang Xiaotao, dean of the School of International Economics and Trade of the Central University of Finance and Economics, said in an interview with China News Agency that in addition to the obvious interference caused by political factors in Sino-US economic and trade relations, the world economic recovery is unstable, and enterprises are unclear about their future expectations; The transfer of some US orders to Mexico, Southeast Asia, South Asia, etc., has also affected the scale of Sino-US trade.

In Zhang Xiaotao's view, the current decline in Sino-US trade volume, especially the decline in China's exports to the United States, is a normal phenomenon in the context of the adjustment of the global industrial division of labor pattern and the acceleration of regional economic integration. This shows that China's dependence on traditional export markets such as the United States and Europe is decreasing, and the market pattern is becoming increasingly diversified, which does not mean that Sino-US economic and trade relations are "decoupled".

Recently, Tesla CEO Musk and many other senior executives of US companies visited China intensively, which shows that the "decoupling" of Sino-US economic and trade is a false proposition.

In the words of Grayser, a former chief economist in the Office of the United States Trade Representative, while the U.S. tariffs on China have an impact on bilateral trade, the behavior of consumers and businesses is more influential than political decisions.

Hua Ganglin, chairman of the American Chamber of Commerce in China, also revealed that China is "always a very important investment destination" for US companies, and US companies are still increasing investment in China, and "most companies have not transferred supply chains."

However, some analysts warn that although the shrinking trade volume between China and the United States does not mean the "decoupling" of the economic and trade between the two countries, some deep-seated problems behind it must be observed.

Cui Xiaomin, an associate researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, wrote that bilateral trade between China and the United States will recover steadily in 2022, mainly dominated by strong domestic demand and price factors in the United States. Last year, NAFTA members, ASEAN, the European Union and other trading partners increased their exports to the United States significantly, faster than China's exports to the United States.

Cui Xiaomin said that China's share of total U.S. trade in goods fell from 2020.14% in 8 to 2022.12% in 9, while the share of Canada and Mexico increased steadily over the same period, with Canada rising from 13.9% to 14.8%. On the US import side, China's share is also declining, accounting for 2022.16% in 4, down 2017 percentage points from 21.4% in 5. To some extent, this reflects the decline in the relative competitiveness of Chinese products in the United States.

It is worth noting that China's foreign trade enterprises have been actively promoting product transformation and upgrading. The "new three things" such as electric manned vehicles, lithium batteries, and solar cells are becoming an important support for China's exports.

Zhang Xiaotao believes that in addition to strengthening market development and product research and development, China should continue to improve the business environment, strive for all possible cooperation opportunities, and gain time and space for domestic industrial transformation and upgrading. In the long run, the outlook for trade between China and the United States remains "cautiously optimistic." (End)