March 2023 saw an expected rebound in the value of goods traded between the U.S. and China.
After falling to the lowest level seen since the Coronavirus Pandemic in the previous month, the combined value of goods increased from $42.2 billion to $45.0 billion.
But that change wasn't enough to break an overall downtrend in the trade between China and the United States. Compared to a post-pandemic trade recovery projection based on how trade between the two nations recovered after the 2008-09 recession, the trailing twelve month average value of goods traded continued to fall. As of March 2023, the gap that has opened since October 2022 has widened to $6.3 billion.
Most of that development has taken place since October 2022. That month saw the Chinese government adopt new policies, in which the country's leaders put their geopolitical concerns ahead of economic ones.
These developments are indicated in the following chart:
Taking a closer look at March 2023's trade data, the collapse in the value of goods imported by the United States from China continued in March 2023. Year over year, the nominal value of those imports has fallen by 35%. Decreases affected 87 of 98 major categories of China's exports to the U.S. The biggest categories affected were consumer electronics (mobile phones, televisions) and industrial machine tools, both of which registered declines exceeding $3 billion each. Meanwhile furnishings and the category of toys, games and sports equipment each saw declines in excess of $1 billion. Together, these four categories of goods accounted for over half the reduction in the value of goods imported by the U.S. from China during the past year.
By contrast, U.S. exports to China increased during March 2023. Their level is 15% higher than what was recorded back in March 2022. The biggest increases were for exports of aircraft, coal and crude oil from the U.S. to China.
How does that compare with the United States' trade with the rest of the world during this period? The next chart gives an indication:
Since October 2022, we find total U.S. imports and exports are growing more slowly than U.S. imports and exports to the rest of the world without China. That can be seen using the parallel dotted lines as a visual reference. There's a very small gap between the total of U.S. imports and exports without China, but a growing one between the total of U.S. imports and exports for the entire world (including China).
That difference indicates the U.S. economy has only partially offset the effects of the decline in China's export of goods to the U.S. that has taken place since October 2022.
A country's imports provide a means of determining its relative economic health. In March 2023, the goods exchanged between the U.S. and China suggest slowing in the U.S. economy while China's economy experienced stronger growth. Even though the combined vale of trade between the U.S. and China improved over February 2022's level, what's hiding in March 2023's underlying trade data gives cause for concern.
References
U.S. Census Bureau. Trade in Goods with China. Last updated: 4 May 2023.
Image credit: Photo by Eric Prouzet on Unsplash.