As the trade gap between the U.S. and China continues to expand Chinese manufactured exports are on track to nearly double U.S. exports in 2013, with a surplus of more than $900 billion, compared with a U.S. deficit of $500 billion, according to a report from the Manufacturers Alliance for Productivity and Innovation (MAPI).
At $299 billion, U.S. global exports of manufactures in the first quarter of 2013 were the same as in 2012, and the trade deficit increased by only $2 billion to $109 billion.
Chinese exports, in striking contrast, rose by 19% over the same period, to $484 billion, while the trade surplus soared by 28% to $175 billion.
“The economic and strategic importance of these rapidly widening differences in exports and trade balances for manufactures relates to the role of high-technology industries for technological innovation and military modernization,”said Ernest Preeg, Ph.D., MAPI senior advisor for international trade and finance.
“For the United States, 75% of research and development and 90% of new patents come from the manufacturing sector, and manufacturing companies are the backbone of defense industry, “ he added.
Preeg poined out that Chinese economic strategy in recent years has centered on rapid, export-led growth. “Based on trade performance in manufactures, it has been a highly successful strategy.”
Exports for the nine largest high-technology industries, which account for over half of total exports for both countries, recorded an increase of $40.3 billion for China from the first quarter of 2012 to the first quarter of 2013, and a disturbing $1.4 billion decline for the United States.
The report notes that U.S.-China bilateral trade in manufactures is extremely unbalanced, with U.S. imports from China at least six times larger than U.S. exports to China.
In the first quarter of 2013, U.S. imports were up by $3.6 billion compared with 2012, to $95.2 billion, while exports to China rose by $1.5 billion, to $16.8 billion. Preeg estimates that the $2.1 billion increase in the deficit in the first quarter equates to a loss of about 10,000 American manufacturing jobs.
Indeed, Preeg argues, if the U.S. maintains its current policy course, it is difficult to project a reversal of the relative rise of China as the world’s number one exporter, with an ever larger trade surplus.
“Given China’s undervalued currency and other financial incentives for investment in high-technology, export-oriented industries, not to mention violations of intellectual property rights, it is unlikely that Chinese export growth will slow sufficiently for the trade surplus to decline,” Preeg concluded.