Exports to China: Vital to US economic growth
- Despite the slowdown in its economy, China continues to be an important contributor to US economic growth. In 2015, US goods exports to China totaled $113 billion, down from the previous two years, but still the third-largest US goods export market behind Canada and Mexico, our neighbors and NAFTA partners.
- An important new development is the rapid growth in US services exports to China. In 2014, the most recent complete year of available data, US services exports to China totaled $42 billion, making China the United States’ fourth-largest services export market. From 2006 to 2014, US services exports to China increased more than 300 percent. Services exports to the rest of the world increased 91 percent.
- Global trade is slowing, but exports of US goods and services to China continue to outpace exports to other major markets. On average, US goods exports to China grew by nearly 9 percent annually over the past 10 years, despite last year’s decline of nearly 6 percent. Of the United States’ top 10 export markets, only the United Kingdom and Germany had positive export growth in 2015, reflecting the slowdown in global trade.
- US services exports to China grew more rapidly than all other major trading partners, averaging nearly 17 percent annually over the last decade. Only Brazil came close over the same period, with nearly 16 percent average annual growth. The 14 percent growth in services exports to China in 2014 far outpaced growth in exports to the United States’ top three markets: the United Kingdom (3.4 percent), Canada (-2.1 percent), and Japan (0.2 percent).
- China’s maturing economy is undergoing important changes that have resulted in a slowdown in GDP and trade growth. Even so, US exports of goods and services to China have grown faster than exports to any other major US trading partner over the past decade. From 2006 to 2015, US goods exports to China increased 115 percent. That is greater than the growth to any of the other top 10 US goods export markets, including the two largest US trading partners: Canada (20 percent growth) and Mexico (78 percent growth).
- Exports continue to play an essential role in the US economy and job growth. US goods exports to China come from a wide range of industries including transportation equipment, agriculture, computers and electronics, and chemicals. These exports also sustain logistics jobs in America’s ports and throughout the country. US services exports to China included travel and education, royalties, transportation, business and professional services, and financial services.
China: An important market for states across the country
- Most states have seen significant increases in exports of goods and services to China since 2006. Thirty-one states experienced at least triple-digit goods export growth to China since 2006, and four states saw growth of more than 500 percent over the same period: Alabama, Montana, North Dakota, and South Carolina. Every US state had triple-digit services export growth to China since 2006, 10 states had export growth of more than 400 percent.
- China is among the top five goods and services export markets for most states. China was a top three goods export market for 33 states in 2015, and among the top five for another 13. That includes states that are not usually associated with strong China trade ties, including Alabama, Arizona, Minnesota, Michigan, New Jersey, New York, Pennsylvania, Ohio, South Carolina, and Tennessee.
- The value of US goods and services exports to China is significant. Last year, 30 states exported more than $1 billion in goods to China, while another nine states exported more than $500 million. In 2006, only 17 states exported more than $1 billion to China. In 2006, only one state exported more than $1 billion to China – California.
- While larger states like Texas, California and New York saw significant growth in exports to China, smaller states benefited, too. Kentucky, Kansas, Utah, Wyoming, Rhode Island, Mississippi, Nevada, and New Hampshire all experienced more than 200 percent growth in goods or services exports over the past decade.
More can be done to strengthen US exports to China
- China is a significant market for US exports and it should be even bigger. The United States has a very small share of China’s overall market. US goods accounted for about 6.5 percent of China’s total imports in 2015, trailing behind China’s purchases from the European Union and South Korea. That market share represents a decline from 2000, when the United States held a 10 percent share of China’s import market.
- Expanding market opportunities in China requires a variety of tools. China maintains an array of tariff and non-tariff barriers that prevent more American goods, agriculture products, and services from reaching Chinese customers. The United States should continue to bring legally sound, industry-supported cases to the World Trade Organization. Congress should expand the resources at the Office of the United States Trade Representative to build upon the successful track record of using the WTO to address unfair Chinese trade practices.
- In addition, the United States should push forward negotiations with China on a high-standard bilateral investment treaty, which would reduce ownership and licensing barriers that keep American companies from selling more products and services in China, including exports.