U.S.-China trade in 2022, at U$730bn, was a new all-time record.
Megan Hogan and Gary Clyde Hufbauer, both at the Peterson Institute for International Economics, look at changes in the pattern of trade between China and the U.S. since 2019 and find little changed over the period.
Aggregate tariffs rose from 3.1% to 19.3%, China bought less aircraft from Boeing and yes, some smaller countries have upped their export-to-the-U.S. game. Taken in isolation each of these small changes at the margin have been talked up by partisans as signs America’s dependence on China’s export manufacturing complex is decreasing; but it isn’t, really.
Moreover, the researchers look at both optimistic and pessimistic scenarios out to 2025 and in both cases conclude the aggregate U.S-China trade balance will rise to either U$789bn or U$855bn, increases of either 8% or 17%. They note along the way that global trade has always increased faster than GDP growth so even the high end estimate is plausible.
The work stops short of the obvious conclusion that, given the reality of the flows, China and America have a strong incentive to move their relationship onto a more stable footing than it’s been on in recent years.
Recent visits to China by Ms. Yellen, Mr. Blinken, Ms. Raimundo and the all-smiles meeting between President’s Biden and Xi in San Francisco recently suggest the current U.S. administration, despite necessary bluster to the contrary, have already gotten that message.
Less of a paper than a monograph you can flip through the very easy 19-pages via this link Despite Disruptions.
Happy Sunday.