China-U.S. Trade Imbalance Surges

According to a Chinese report, that country's trade surplus with the United States climbed more than 43 percent last year; U.S. government figures ...
Stephen TaubJanuary 12, 2006

The global love affair with goods made in low-cost China has resulted in a tripling of that country’s trade surplus with the rest of the world, to a record $102 billion, according to published accounts of a Chinese government report.

China reported total foreign trade exceeding $1.4 billion, according to The New York Times, which would rank it third in foreign trade, after the United States and Germany and ahead of Japan.

Citing the Chinese report, the Times also noted that in 2005, China’s surplus with the United States surged more than 43 percent, to a record $114.7 billion, compared with $80 billion the prior year and $28 billion in 2001.

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Imports apparently began to rise and exports began to slow somewhat in the second half of 2005, the paper noted. The Times added, however, that the trade surplus will no doubt lead the United States and European Union countries to further pressure China to allow its currency to appreciate even more, which would make its goods more expensive outside the country. The buildup in foreign currency will also, no doubt, inspire China to use that money to try and buy foreign-based companies, which could cause even more political tension.

The bulk of China’s trade surplus in 2005 came from exports to the world’s wealthiest regions, especially the United States and Europe, noted the Times. Excluding the United States, the paper added, China had a $12 billion trade deficit with the rest of the world, mostly with South Korea, Japan, Malaysia, Saudi Arabia, and Angola.

Even these figures, however, may be understated.

According to the Times, U.S. government data shows that through October, China’s trade surplus with the United States was more than $166 billion and might reach $200 billion for the full calendar year. According to the paper, the difference stems from several factors, including whether Hong Kong exports are included.

“U.S. politics will become unmanageable if China’s trade deficit with the U.S. continues to grow,” said Sen. Max Baucus (D-Mont.), according to the Times. “It is in China’s interest to make concrete progress in reducing the trade imbalance.”

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