Chinese export growth of manufactures, which went from a very high 19% in the first quarter of 2013 before decelerating to 3% in the second quarter, raises a number of intriguing questions, according to an analysis from the Manufacturers Alliance for Productivity and Innovation (MAPI).
In a report on the trade figures in manufactures for the first half of 2013, Ernest Preeg, Ph.D., MAPI senior advisor for international trade and finance, notes that U.S. exports were flat in the first quarter year-over-year and grew by only 2% in the second quarter.
The trade balances showed an even more striking contrast. The U.S. deficit was up by 2% in the first quarter and was flat in the second quarter, while the extraordinary growth of the Chinese surplus of 28% in the first quarter reversed to a 5% decline in the second quarter.
“The big question is whether these second quarter figures mark a definitive change of course for China, with at least a leveling off of the surging surplus of the past several years, or merely a quarterly offsetting reaction to the extremely high first quarter growth in exports and the surplus,” Preeg says. “The dramatic decline in export growth is by far China’s slowest growth since the 2009 global recession.”
Still, China maintains its large lead in exports. Exports for the nine largest high-technology industries, which account for more than half of the total exports for both countries, recorded $268.2 billion for China from the second quarter of 2012 to the second quarter of 2013, 50% larger than the $178.8 billion of U.S. exports. For the three information technology sectors – office and data processing equipment, telecommunications and sound recording, and electrical machinery and appliances – Chinese exports of $184.8 billion were 3.5 times larger than the $52.6 billion of U.S. exports for the same sectors.
“U.S.-China trade in manufactures is extremely unbalanced,” Preeg states. “Over the past couple of years, through the first quarter of 2013, U.S. manufactured imports from China were more than six times larger than U.S. exports to China. The second quarter figures, however, show a significant decline in this ratio from 6.1 in the second quarter of 2012 to 5.2 in the second quarter of 2013. A 5-1 ratio is still highly lopsided, but this is a welcome shift in the right direction.”