Unexpectedly Intriguing!
13 September 2022

After a rocky first half of 2022, particularly for China's economy, the value of goods traded between the the U.S. and China increased year-over-year during July 2022. That change can best be seen in the following chart, which tracks the growth rate of exports from the U.S. to China and imports from China to the U.S. from January 1986 through July 2022.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods, January 1986 - July 2022

The increased activity corresponds with improvements in China's domestic economy, which is being held back by its leaders' ongoing series of COVID lockdowns in major cities within the country. Unfortunately, this improvement falls in between the lifting of COVID lockdowns in some regions in June 2022 and the government-mandated imposition of new lockdowns in other regions in late August and early September 2022.

Despite the Chinese government's ongoing disruptions to its economy from its zero-COVID policy, which indicate the country's leaders have little confidence in Chinese hospitals' ability to handle new coronavirus infections, the combined value of goods traded between the U.S. and China now exceeds a counterfactual projection based on the recovery in trade between the two countries after 2008-09's "Great Recession".

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - July 2022

That achievement comes with an asterisk. The latest trade data reflects nominal dollar values that are not adjusted to account for the effect of inflation, where the real volume of goods transacted between the U.S. and China in 2022 falls below the physical volume of goods recorded at identical dollar values in 2018.

Looking forward, we're coming up on the time of year when China's exports to the U.S. peak as it ships the bulk of goods that will be sold to U.S. consumers during the Christmas shopping season and U.S. exports to China peak with the export of soybeans in the months of September through November. Because of these seasonal factors, we anticipate the combined value of trade between the U.S. and China will outpace the counterfactual's projection during the next several months.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 7 September 2022. Accessed 7 September 2022.

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