A SIGN OF THE TIMES: China Eclipses U.S. as Largest Trading Nation Measured in Goods

Official figures from both countries show that China surpassed the U.S. to become the world’s largest trading nation last year, as measured by the sum of exports and imports of goods. Export and import of U.S. goods last year totalled $3.82 trillion, the U.S. Commerce Department reported last week. China’s customs administration reported last month that the country’s trade in goods in 2012 amounted to $3.87 trillion.

The U.S. economy which, according to the World Bank, is almost double the size of China’s in GDP and PPP (Purchasing Power Parity) terms, recorded a surplus in services of $195.3 billion last year and a goods deficit of more than $700 billion. According to U.S. Bureau of Economic Analysis (BEA) figures released Feb. 8, China’s 2012 trade surplus, measured in goods, totalled $231.1 billion. It is remarkable that an economy that is almost half the size of the U.S’  has a larger trading volume. However, the increase isn’t all the result of an undervalued Yuan fuelling an export boom, Chinese imports have grown more rapidly than exports since 2007.

Last month, China’s trade expanded more than estimated, with exports rising 25 percent from a year earlier and imports increasing 28.8 percent. A significant portion of China’s trade involves importing raw materials and parts to be assembled into finished products and then re-exported. Another important element contributing to increased imports is the fact that China has opened up its markets to several categories of mass consumer and luxury goods from films and fast-food franchises to high-end fashion, jewellery and cars. This bodes well for the future, because a country that has exploited Western markets for so long must also be willing to open up its own markets to products from the West. A healthy and equitable balance of trade between the giants can only be good for the world economy.
A sign of the times indeed...

photo credit: Peter Fuchs via photopin cc