China-US bilateral trade hits seven-year low since China's entry into WTO

In 2008, China-US bilateral trade totaled 333.74 billion USD, an increase of 10.5 percent from 2007, the lowest growth rate in the seven years that passed since China's entry into the WTO. The data are included in a report issued by the General Administration of Customs of the PRC on February 5. The reduction in the share of Chinese products in the US market is worthy of attention.

China's exports to the US reached 252.3 billion USD in 2008, up by 8.4 percent, showing a single digit drop in the growth rate for the first time in seven years. The country's imports from the US totaled 81.44 billion USD, up by 17.4 percent, an increase of 0.2 percentage points in growth rate. Foreign trade with the US was at a surplus of 170.86 billion USD, increasing by 4.6 percent.

In September 2008, the value of China-US imports and exports reached 31.79 million USD, setting a new historical monthly high. However, beginning in October, China-US trade gradually slid lower month after month. After experiencing a downturn in November, China-US imports and exports totaled 25.91 billion USD in December, falling by 1.5 percent, indicating a drop for the second month in a row. In foreign trade, exports of processing trade witnessed a noticeable decline in its rate of growth, exports of mechanical and electrical products occupied a smaller share of the market, and exports of an overwhelming majority of traditional labor intensive products experienced a downturn.

Also worthy of attention is the fact that in the first ten months of 2008, Canada overtook China again as the largest exporter to the US, and China reassumed its position as the US's second largest exporter. The market share of China's products fell to 15.7 percent from 16.4 percent in the same period in 2007, a drop of 0.7 percentage points.

The General Administration of Customs of the PRC points out that there are two main reasons for the recent downturn in China-US bilateral trade. First, the financial crisis has caused a drastic shrinkage in US consumer demand. Second, the cumulative effect of the appreciation of the Renminbi was felt intensely, directly weakening the competitive price advantages of Chinese products, especially for most of the traditional labor intensive products that do not carry much bargaining power among consumers, generally hurting exports to the US market.

Source: People's Daily Online