The numbers for 2021 US trade in goods were publishedyesterday. China of course published their data earlier, because it’s so easyto survey 1.4 billion people in a middle-income country. The two sets ofresults strengthen previous patterns: Electronics dominated, with commoditiesplaying a secondary role. They also serve as one set of measurements ofcomparative American and Chinese vulnerability.
The PRC was the world’s top exporter, at $3.36 trillion in2021, near 19 percent of its GDP (alldata here). Hong Kong was said, misleadingly, to receive more Chinese exportsthan Japan and South Korea combined. In fact, goods largely route through HongKong to final destinations. Ignoring this flaw, the US topped all countries,receiving one-sixth of Chinese exports.
Imports were $2.69 trillion, yielding the largest goodstrade surplus in world history at $677 billion, or about 3.8 percent of ChineseGDP. This compares to 3.4 percent in 2020 — China’s economy became moreexport-dependent last year. Remarkably, the largest single source of importswas tiny Taiwan, at 9 percent.
By category, the top export was “Electrical machinery andequipment and parts thereof; sound recorders and reproducers, television imageand sound recorders and reproducers, and parts and accessories,” at 29 percentof the total. This is heavily consumer electronics. It was also the top importcategory, at one-fourth of the total.
Oil and gas was the PRC’s second-largest import at 15percent. Putting countries and products together, oil and gas suppliers werequite diversified, reflectingmanyyears of efforton Beijing’s part. Hong Kong was nominally the largestdestination for electronics exports, while the US led among actual countries,accounting for 4 percent of total Chinese exports with just our electronicspurchases.
On the import side, electronics from Taiwan were the biggest category, at over 6 percent of the total. The next slot went to Australian metal ores, at 4 percent of total imports. It’s no accident thatChina’s sanctions against Australianever included ore. Imports of integrated circuits rose 27 percent to $432 billion, 16 percent of the total and nearly as large as crude oil and iron ore combined. Beijing’s loud effort tobecome less dependent in chipshas not yet worked.
On the American side (also goods only — services data are slower), the 2021 deficitslightly exceeded $1 trillion. Imports stood at $2.83 trillion, or over 12 percent of GDP. Exports, imports, and the deficit all set records. Canada and Mexico were the main two export partners, while China easily topped importers at near 18 percent of the total.
The leading US exportwas pharmaceutical preparationsat $83 billion, or close to 5 percent of the total. Aircraft and parts weresecond near $80 billion. Autos and parts combined topped imports at $259billion. Pharmaceuticals were next at $171 billion. The pharmaceutical tradedeficit is an American vulnerability, especially considering thatChina dominates the chemical industrysupplyingpharmaceutical manufacturing.
Using US data regarding bilateral trade, American exports toChina set a record in 2021. Despite this, the goods trade deficit was $355billion, rising over the course of the year. The trend reflected the broaddemand recovery from the COVID blow.
By product, the top American export to the PRC was soybeansat $14.1 billion. Semiconductors were second, at a record $13.4 billion. Thesefigures are dwarfed by the import side, where cell phones led at $75 billionand computers were next at $59 billion. Those were record highs and Chinaaccounted for over half of 2021 US imports in both categories.
At the macroeconomic level, China’s goods exports to the UScontinue to account for approximately 3 percent of its annual GDP. The USreports goods imports from the PRC are the equivalent of a bit over 2 percentof our GDP. Flows heading from America to China are smaller.
Drilling down a bit, the electronics supply chain stands out. By volume, it starts with China’s large imports from Taiwan, which help feed its huge electronics exports in general and sizable consumer electronics exports to the USin particular. There are strong economic incentives for China to attempt to displace or control the Taiwanese component of this chain.
