World

China trade surplus shadows Obama visit

by Babel-Fish | November 12, 2009 at 06:21 pm

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HONG KONG - China's surging trade surplus, with the increase last month almost double the September figure, makes it impossible that trade issues will not be a key topic when United States President Barack Obama makes his first visit to Beijing this Sunday.

The surplus was US$24 billion in October, compared with $13 billion in September, bringing the total for the year so far to $159.23 billion.

Trade tension between the two countries was already rising before the latest data were released on Wednesday, with the US imposing a series of anti-dumping sanctions on Chinese imports

The Chinese government already know that America has to resort to trade protectionism. They already know the President Obama will be bringing some anti-dumping restrictions to the negociating table.

But USA is not the only nation that has to talk about high import tax on 30% or so of chinese products. Tires and steel pipes is just the beginning of a very needed form of protectionism. With out that factor it will be practically impossible for US and Western manufacture bases regrowth.

China is not silly and has already formed plans to improve its home consumer market. However China will be against anti change without its authoritive word and agreement. It may hold most of the aces but it still needs the west to keep its economy sweet.

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Uwe Paschen

at 19:30 on November 12th, 2009

At one point the US had a trade surplus and did not complain about there own surplus, they tried very hard to maintain it for some time.

Times have changed and maybe one day we will manage to reach fair trade for all Nations...

Hugh Askew

at 20:15 on November 12th, 2009

Every nation tries to keep any advantage it has. Only natural, normal, and in their own best interests, whether it be China, the US, or whomever.

The_Cynic

at 21:02 on November 12th, 2009

What products have "Made in the USA" on them? There are some, many in fact - but I just don't know how many.

Better question - how many US corporations' products have a "Made in China" on them and sold to Americans just to increase profit and shaft American buyers?

Babel-Fish

at 21:08 on November 12th, 2009

Curtsy of Babel Fish

Made in USA

Babel-Fish

at 21:05 on November 12th, 2009

Nov. 5 (Bloomberg) -- The U.S. and the European Union asked the World Trade Organization to probe Chinese taxes on exports of raw materials used in the metals and chemical industries, escalating a third joint complaint against China.

The duties discourage the export of commodities including coke, bauxite and manganese that are “critical” for U.S. and European manufacturers, while keeping them cheaper and available in China, the U.S. and the EU said yesterday.

Trade tensions with China have grown after the worst economic crisis since the Great Depression crushed global exports, leading the WTO to forecast a 10 percent drop in goods trade this year. Pascal Lamy, the WTO’s director general, said on Nov. 3 that the threat of protectionism may linger for another two years as countries attempt to protect jobs in domestic industries.

“This is another sign of trade tensions around the world,” said David Cohen, an economist at Action Economics in Singapore. “There’s tension, but it’s yet to get out of hand; it’s a far cry from the 1930s, when protectionism clearly aggravated the collapse in trade.”

Cohen said that China pegging its currency to the dollar was a “more fundamental issue” for major nations to tackle. The central bank has kept the yuan close to 6.83 per dollar since July 2008, helping to shelter exporters from the crisis.

More fuel for the fire....

nanute

at 03:14 on November 13th, 2009

While your figures show an increase in the world trade surplus deficit with China, the trend is that China's trade surplus is actually falling.

Expressed in terms of 3 monthly moving averages China’s monthly trade surplus was $22.5 in August 2008, immediately before the onset of the financial crisis and the collapse of Lehman brothers, rose to $38.1 billion January 2009, and has since dropped to $12.5 billion.

The trends behind China’s shrinking trade surplus are clear. Under the impact of the financial crisis both China’s exports and imports have declined. But its imports have declined far less than its exports. Since the peak month of August 2008 China’s exports have fallen by 28.0% buts its imports have only declined by 18.5%. China’s net trade position is therefore acting as a locomotive for the rest of the world economy.

Indeed this change in China’s trade position, if the trend continues, is a significant stimulus. The monthly extra demand for the world economy created by China for the latest month, compared to August 2008, is $18.5 billion – its monthly trade surplus having shrunk from $26.7 to $8.3 billion. This would be equivalent to an annualised $220.9 billion.

Don't expect China to budge on the currency issue either. The effect of letting the Chinese currency truly float would increase the value, and erode the Chinese surplus further.