How Does Trade Affect Both the Economies of China and the US? BY JOSH UNDERBERG

China and United States Trading Relationship

The United States trade with China dates to as far back as the American Revolution. During the time of the Revolution Americans didn't know too much about China but they did know about some key Chinese goods such as tea. "On the eve of the revolution, the Americans were consuming more than 1 billion cups of tea annually. The use of china or porcelain, another Chinese invention, was widespread in the colonies. Although originally in the late 1600s, early 1700s, it tended to be the wealthier Americans who could purchase these exotic Chinese goods, by the mid-1700s the demand had ramped up, the supply had ramped up, and prices had gone down far enough so even average American colonists were drinking tea and would have china plates and bowls in their cupboards." China trade was much desired by Americans after defeating the British in battle. Merchants were already beginning to think of a day in which they could all go to China and trade. Trade between the United States and China has kept thriving throughout the years.

China is currently the largest goods trading partner of the United States.

"$598 billion in total (two way) goods trade during 2015. Goods exports totaled $116 billion; goods imports totaled $482 billion."

What is the United States Trade Deficit With China?

China is importing good to the United States more so than the United States is exporting to China.

Imports are quickly rising because China can produce goods that Americans want at a much lower cost.

United States based companies are sending raw materials for consumer electronics, clothing, and machinery to China where they are then assembled at a very low cost before being sent back to the United States.

These products sent back to United States are considered even though the companies are American-owned profiting companies.

In 2015 the United States trade deficit with China was $367 billion which set the new record.

The United States exports to China were only $116.2 billion.

Imports from China to United States hit a record of $483.9 billion.

Imports From China to United States

"China was the United States' largest supplier of goods imports in 2015."

The top import categories (2-digit HS) in 2015 were:

  1. Electrical machinery ($133 billion)
  2. Machinery ($104 billion)
  3. Furniture and bedding ($28 billion)
  4. Toys and sports equipment ($24 billion)
  5. Footwear ($17 billion)

"U.S. imports of agricultural products from China totaled $4.4 billion in 2015, our 3rd largest supplier of agricultural imports."

Leading categories include:

  1. Processed fruit & vegetables ($1.0 billion)
  2. Fruit & vegetable juices ($321 million)
  3. Snack foods ($208 million)
  4. Fresh vegetables ($178 million)
  5. Spices ($159 million)

Exports From United States to China

"China purchased $165 billion in goods and services from the United States in 2015, representing 7.3 percent of all United States exports and about 1 percent of the total United States economic output."

Furthermore, China was the 3rd largest export market to the United States in 2015.

The top export categories in 2015 were:

  1. Aircraft ($15 billion)
  2. Electrical machinery ($13 billion)
  3. Machinery ($12 billion)
  4. Miscellaneous grain seeds
  5. Fruit (soybeans) ($11 billion)
  6. Vehicles ($11 billion)

"The United States exports of agricultural products to China totaled $20 billion in 2015, our 2nd largest agricultural export market."

Leading categories include:

  1. Soybeans ($11 billion)
  2. Coarse grains (ex. corn) ($2.1 billion)
  3. Distillers grains ($1.6 billion)
  4. Hides & skins ($1.3 billion)
  5. Cotton ($870 million)

Export Growth Between The United States and China

"America's 11th-largest export market in 2000, China has grown to become the third-largest destination for American goods and services."

From: Biography in Context

United States Manufactoring Productivity Growth

"Since 2003, productivity growth in US manufacturing outpaced most advanced economies. Oxford Economics calculates that US manufacturing productivity increased by 40 percent from 2003 to 2016, or 2.5 percent annually, compared with 23 percent in Germany."

From: Biography in Context

How Are Peoples' Jobs in The United States Affected by Trade with China?

The trade relationship between China and the United States supports just about 2.6 million jobs in the U.S.

These jobs include a large range of different industries.

Some of these jobs are jobs that Chinese companies have created in America.

From: Biography in Context


"Rapidly rising factory wages and a rising currency make Chinese workers relatively less cost-competitive than their American counterparts. United States factories are still 90 percent more productive than Chinese manufacturers."

From: Biography in Context

Additional Questions

Is China as involved in trade with othe countries as it is with the United States?

Where in China are most of the factories located?

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