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US goods exports to China rebound sharply, but services drop

By ZHAO HUANXIN in Washington | chinadaily.com.cn | Updated: 2021-05-13 04:23
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US goods exports to China rebounded strongly in 2020 — growing by nearly 18 percent — propelled by the Asian country's tariff exclusions and early recovery from the pandemic, the US-China Business Council (USCBC) said on Wednesday.

But US services exports to China, which include travel, education and financial services, declined by 3 percent in 2019, the first time in more than a decade the category has fallen, a clear indicator that strained relations between the two countries took a toll on cross-border exchanges.

Notably, American trade with the rest of the world contracted by 15 percent,

"Combined exports of goods and services to China still supported nearly 1 million US jobs in 2019, the most recent year for which data are available," the USCBC said in 2021 State Export Report.

The annual report, which chronicles each state's trade with China over the past decade and details how many jobs that exports supported, offers a clear clue on how soured relations, including the lingering trade war, have impacted trade between the world's top two economies along with jobs creation in the US.

For example, it said that visiting Chinese students are a significant boost to university revenues across the United States. For three states — California, New York and Massachusetts — the students contribute more than $1 billion in tuition, fees and local spending.

But in 2019, exports of education-related travel alone fell by about 3 percent, or $422 million, negatively impacting school budgets across the United States.

That result was partly to "increased scrutiny of Chinese students and visa restrictions", as relations between Beijing and Washington have fallen to their lowest point since China and the US forged diplomatic ties in 1979, according to the report.

While most data in the report were updated to 2020, those for the services lag by a year and do not include the COVID-19 pandemic's effects.

It is thus "highly likely" that the 2020 data will show that travel exports from US states declined even further that year, according to the report.

Overall, China fell from the US' third- to fourth-largest services export market, but it has remained the fastest-growing destination over the past decade, as it has been for the US goods exports.

Since 2011, US services exports to China have more than doubled, registering the highest average annual growth rate of 11.6 percent, according to the report.

By comparison, the top two markets of the United Kingdom and Canada grew by an average of less than 4 percent over the last 10 years, it said. Ireland now takes the third spot in US services exports growth.

As to goods exports, China remained the United States' third-largest goods export market in 2020, following Canada and Mexico.

On average, US goods exports to China have been growing by 2.4 percent annually for the last decade, which is faster than the rest of its top goods markets.

"The stark contrast between the growth in exports to China and that to the rest of the United States' top trading partners in 2020 can largely be attributed to China's tariff exclusions and early economic recovery post-COVID-19," the USCBC said in the report.

It said that China's tariff-exclusion process, which began in March 2020, facilitated a more normal flow of goods from the United States.

In 2019, the US exported just under $105 billion in goods to China. Last year, that number jumped to $123 billion, the second-highest total in a decade.

The USCBC said exports to China benefit nearly all US states and industries, with many states also generating "substantial economic value" from services exports.

China was a top-five goods export destination for 45 US states in 2020, and 35 of them saw growth, which is linked with a rise in jobs, according to the report.

For example, an increase in exports of oilseeds and grains in 2019 helped boost jobs supported by exports to China in the US heartland, where agricultural exports are a key pillar of the local economies, according to the report.

Illinois, Iowa, Minnesota, Nebraska and the Dakotas saw exports of oilseeds and grains more than double in 2019 as China made goodwill purchases during trade negotiations.

In 2019, the six states all saw the number of jobs supported by those exports grow by more than 2,000 each, with Iowa adding around 6,000.

Further west, Oregon added 8,659 jobs thanks to the rapid growth of exports in semiconductors and parts to China.

Overall, 16 US states saw jobs supported by exports to China increase, while the other 34 saw them decline, with the highest decrease in Washington state, which saw its situation turn grim following the trade war that was initiated and intensified during the Trump administration.

Though the state's exports of motor vehicles, along with software royalties to China had a strong year in 2019, it was not enough to make up for an $8.7 billion decline in the export of aerospace products and parts to China, which fell by roughly 76 percent from the previous year, noted the report.

"Overall, Washington's exports to China fell by $9 million in 2019, and jobs that had been supported by those exports fell by 38,000," it said.

In late October, US Congressman Rick Larsen, who is from the Pacific Northwest state, said of the trade war's impact on his constituents: "When the US-China relationship sneezes, Washington state gets a cold."

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