U.S. exports to China boom, despite trade tensions

REUTERS - Chinese Vice President Xi Jinping looks at vases full of soybeans and corn as Iowa Governor Terry Branstad (L), Natalie Kimberley and her eight-month-old son Austin, Martha Kimberley (3rd L) and Rick Kimberley (R) look on during a visit to Kimberley's family farm, in Maxwell, Iowa in February. Soybean exports to China have increased significantly.

BEIJING — While the U.S. trade deficit with China continues to soar, a surge in U.S. exports is emerging as a bright spot in the often-troubled trade ties between the world’s largest economy and its largest foreign creditor.

With a richer China showing a growing appetite for U.S. products, the flow of goods includes an increasing volume of American soybeans, cars, airplanes and medicine — and even garbage that can be mined for copper and aluminum. Overall, U.S. exports to China are up nearly 50 percent in value since 2008.

Graphic

U.S. exports to China
Click Here to View Full Graphic Story

U.S. exports to China

Gallery

The surge is happening without much change in Chinese government policies and without much specific help from the Obama administration, which has a stated goal of doubling all U.S. exports globally by 2014. Instead, experts say, the main reason for the increase has been a booming China, where wealthier tastes include an increased appetite for meat — and hence for soybeans used as livestock feed.

In almost every U.S. state and congressional district, exports to China have grown exponentially. Whether it’s pecan farmers in Georgia, plastics producers in Virginia, airplane makers in Washington state or scrap-metal dealers in places as diverse as Texas and New York — all have seen a boom in exports to China.

But as impressive as the U.S. export figures look, businesspeople and economists say that the number could be higher and that it would grow even more if China lowered its Great Wall of protectionist barriers.

“The China market should probably be even bigger than it is,” said John Frisbie, president of the Washington-based U.S.-China Business Council. “It is absolutely right to make sure Americans understand that China’s market is fairly open to U.S. goods and services, but at the same time, be clear that there are many market access barriers that make the market less than it should be.”

The boom in U.S. exports is not helping erase America’s trade deficit with China, which was $295 billion in 2011, $22 billion higher than the year before. But American exports to China have increased by 468 percent since 2001, when the country joined the World Trade Organization, and are up by nearly 50 percent since 2008.

American business leaders applaud the Obama administration for putting the spotlight on exports during meetings with Chinese President Hu Jintao last year and with Vice President Xi Jinping during his visit to Washington last month. But they say there has been little, if any, change in the Chinese government’s trade policies, licensing laws and investment rules — which, according to American policymakers and businesspeople, restrict China’s markets in some areas and keep the playing field uneven. The Chinese currency is undervalued by as much as 30 percent, U.S. officials have said.

So what, precisely, is going on? And what is driving the surge?

The top export last year was food, reflecting China’s insatiable demand for soybeans, which are used here for livestock and poultry feed — and are cheaper than importing feed grain.

“China imported more soybeans from the U.S. because people’s living standard has improved and they need more nutritious food,” said Zheng Fengtian, a professor of agriculture and rural development at Beijing’s Renmin University. Importing soybeans “satisfies people’s needs for meat, eggs and milk,” he said.

The effects of China’s newfound wealth and tastes are showing up elsewhere in the food business, to the benefit of American exporters. For the first three quarters of 2011, the Agriculture Department saw increases in exports to China in four categories: snack foods, pork, dairy products, and beer and wine.

“You’re seeing the impact of the economic growth in China that has brought much of the population into that middle-
income consuming status,” said Scott Sindelar, Agriculture Department consul at the U.S. Embassy in Beijing. “It’s the growing population of middle-income consumers who are changing their food preferences and moving more and more to a meat diet.”

In the snack department, a major American export on the rise has been tree nuts — almonds, pistachios and, more recently, pecans, causing a major transformation in the once-struggling U.S. pecan industry, with more investment and more trees being planted.

Many urban Chinese prefer imported American and other foreign goods — such as dairy products — after a series of scares here over contaminated food.

The U.S. food export figures are seen as something of a success — one of the rare areas in which the United States has a trade surplus with China. And that gap is likely to widen, because China, with its huge population, lacks the arable land and high-tech agribusiness farming techniques of the United States.

But despite that success, some agricultural exports remain hindered by barriers and market restrictions in China.

American chicken feet are being blocked here in a tit-for-tat trade dispute with the United States that involves Chinese tires. American beef has been banned here since 2003, initially because of concerns over mad cow disease — although there has not been a case of the bovine infection for nine years.

Another growing sector for export is U.S.-made pharmaceuticals. As China’s population ages and incomes rise, the demand for imported medicines is expected to increase.

And can the export surge last? Experts said there are worrying signs that China’s economy is experiencing a slowdown, although it remains unclear whether it is slowing faster than China’s economic policymakers would like.

Researcher Liu Liu in Beijing contributed to this report.

 
Read what others are saying