China has made an announcement revealing that the U.S trade deficit with China is still very much a problem and will continue to be so as the U.S. economy improves.
According to a recent Chinese report, China had the largest-ever annual trade surplus with the U.S. in 2017.
“A global recovery led by the U.S. provided a shot in the arm for Chinese exporters last year, boosting China’s economy. Rising American demand, in particular, pushed up Chinese shipments, expanding China’s trade surplus in goods with the U.S. by 10% to $275.8 billion in 2017, according to Chinese customs data released Friday,” writes Wall Street Journal. “That figure, a record for the nearly five decades for which such data exist, marks the U.S.’s largest trade deficit with any trading partner. By comparison, China’s overall foreign trade surplus contracted 17% as higher prices of oil, iron ore and other commodities raised the value of inbound shipments from countries like Russia, Australia and Saudi Arabia.”
China has the world’s second-largest economy, but financial experts have warned that the country’s growth is being fueled by an increasing debt.
China’s surplus with the world may have dropped 17%, but the shipments to the U.S. grew by 11.5%.
So as the U.S. economy improves, the more money China is making from traded deals.
“The risks of growing U.S.-China trade conflicts are high,” said Zhang Ming, a senior economist at the Chinese Academy of Social Sciences to WSJ.
This recent report will like only influence the Trump administration to take a stricter stance on China trade agreements.
“President Donald Trump has promised sterner measures to curb the U.S.’s chronic trade imbalance with China. In a turnabout in tactics, Trump administration officials have set aside the longstanding practice of eking out piecemeal concessions from Beijing on trade and market access. Instead, U.S. officials are preparing sanctions or other enforcement actions against China to try to challenge practices that the administration says favor Chinese companies and restrict U.S. ones,” writes WSJ.
The Trump administration has discussed introducing penalties on Chinese imports, like aluminum, steel, and solar equipment. But, this could ignite a trade war. China imports a large supply of U.S. soybeans, which could change in response to penalties.
Not to mention, Chinese companies have been for years accused of stealing trade secrets from U.S. companies and then making a similar product for much less money.
On his campaign trail, Trump promised to implement measures to correct the trade imbalance with China.
But once Kim Jong-un elevated his threats to the U.S. and started to test nuclear weapons on a regular basis, Trump tried to get China to apply pressure to North Korea.
“We’ve been much tougher on China, but not nearly as tough as I would be, but they are helping us a lot with North Korea,” said Trump to the WSJ.
Author’s note: The trade imbalance is a huge problem, especially since the Chinese are stealing our technology and then they are selling it back to us for a cheaper price. The trade deficit has been a problem for a while, but we finally have a president who might do something about it.
Editor’s note: In the short run, China may very well help with North Korea. But dealing with North Korea is also good for China, so we need not make concessions to get their help. It seems Trump is delaying negotiations with China, and that may be the wisest move at the moment, to deal with both issues.