Economy Watch: Report Details Sino-American Economic Ties
- Jan 11, 2017
On Tuesday, the US-China Business Council released a report done for the organization by Oxford Economics, “Understanding the US-China Trade Relationship. Timely reading, considering that the incoming administration’s plans for China are still unknown.
The report begins with the scope of the relationship, noting that the U.S.-China trade relationship of today “supports roughly 2.6 million jobs in the United States across a range of industries… as the Chinese middle class continues its rapid expansion over the next decade.” It added that the number of Chinese middle-class consumers will actually exceed the entire U.S. population by 2026, which provides U.S. companies with significant opportunities to reach a “new and lucrative customer base that can further boost employment and economic growth.”
Other data included in the report was that China purchased $165 billion in goods and services from the United States in 2015, representing 7.3 percent of all U.S. exports and about 1 percent of total U.S. economic output.
Although some U.S. manufacturing jobs have been lost because of the trade deficit, U.S. firms sell high-value products to China, including cars and trucks, construction equipment and semiconductors, which support jobs as well as office and industrial real estate. U.S. firms also export business and financial services, totaling $6.7 billion in 2014 and $7.1 billion in 2015.
Put another way, U.S. exports to China directly and indirectly supported 1.8 million new jobs and $165 billion in GDP in 2015, the report noted. When the economic benefits generated from U.S. investment in China and Chinese investment in the U.S. are combined, the total amounts to 2.6 million U.S. jobs and about $216 billion of GDP.
Oxford Economics further noted that U.S. manufacturing productivity increased by 40 percent from 2003 to 2016, or 2.5 percent annually. Compared with China, U.S. factories are still 90 percent more productive than Chinese manufacturers. “These trends may lead to some ‘reshoring’ or retention of manufacturing jobs in the United States,” regardless of what the new administration does, the report said.