China is the largest supplier of goods imports to the US, indeed American purchases from China are the single largest trade relationship in the world. The purchases are dominated by end-use consumer goods, topped by cell phones and computers and including multiple kinds of clothing.
These goods are purchased freely by American consumers based on their quality and price. Clothing imports increase the buying power of the poor disproportionately and mobile telecom devices would also be much more expensive without China-based production.In consumer electronics, especially, the dollar figures are exaggerated. The full value is designated as Chinese but often only the assembly occurs in China. The supply chain usually starts with the US itself and can include Germany, Mexico, and multiple East Asian countries. Evaluating trade by where value is added can lead to starkly different results than conventional calculations.
While Chinese imports reflect healthy American demand, flat American exports reflect flagging Chinese demand and harmful policy. Exports of American cars and car parts are notable but limited by Chinese trade barriers, prompting US “tariff-jumping” investment in China. Soybean shipments are thriving but the rest of the agriculture trade relationship is smaller than it should be, as China attempts to maintain self-sufficiency in corn and wheat.
The
biggest potential growth field involves health. American medical
equipment and biologics should see larger shipments to China than are
now occurring and, certainly, rapid growth from here. This is an area of
clear American comparative advantage.If Chinese policies continue to interfere with comparative advantage, the bilateral trade relationship will continue to be vulnerable. It will be especially vulnerable if the US is able to complete a sound Trans-Pacific Partnership with 11 other countries in the Asia-Pacific, several of whom directly compete with China.
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