It was the best of times, it was the worst of times.
A study of United States trade with China in the last two years is a tale of two statistics, according to the U.S.-China Business Council (USCBC), a U.S. trade group of 260 companies. For some industries and companies, they have had a dickens of a time.
More goods were exported to China, with an 18% increase in 2020 and a 21% leap in 2021, when $149.2 billion in products were exported to China, USCBC President Craig Allen said during a Tuesday news conference as its U.S. Export Report 2022 was released. That is an all-time high, continuing a trend from 2020, as the trade war between the two nations sparked by tariffs imposed by former President Donald Trump in 2018-19 eased.
It was an especially positive time for the Midwest, as Chinese buyers purchased large amounts of soybeans, corn, sorghum, pork and other agricultural commodities. U.S. firms also sold a lot of oil and gas, semiconductors and medicines and pharmaceuticals to China.
But although the news on goods was good, there was a steep decline in the amount of U.S. services bought by Chinese customers, a total of $37 billion for 2020, the most recent year comprehensive data was available. That’s a decline of 33%.
The decline in services exports — hitting the lowest figure since 2013 — is clearly linked to the COVID-19 pandemic and the devastating impact it had on the travel industry and education-related travel, Allen said.
Service exports linked to personal travel and tourism and business travel from China to the United States fell 90%. Education exports to China, primarily tuition paid by Chinese students to U.S. universities and other education-related expenditures, declined more than 19%.
“Much of this decline can be attributed to disruptions to students’ plans to pursue education in the United States due to COVID-19 travel restrictions,” the report states. “However, it is worth noting that while Chinese students make up the largest demographic of international students studying in the United States, the data for 2019 suggest that the trend of fewer Chinese students coming to study in the United States began even before the pandemic.”
Although it was a mixed bag of results, there was a clear negative impact for U.S. workers, the report showed.
“When it comes to jobs supported by U.S. exports to China, the bump in 2020 goods exports from tariff relief did not make up for the pandemic’s impact on services exports,” it states. “The number of U.S. jobs supported by both goods and services exports to China stood at just over 858,000 in 2020, roughly 44,000 fewer than in 2019, a 5% drop.”
Again, the results differed depending on where people worked.
“The jobs numbers tell a complicated story,” Allen said. “While strong goods exports bolstered jobs in many communities across the country, the collapse of travel and the service industries tied to it was so severe that the total number of U.S. jobs supported by exports to China fell from the year before.”
The report breaks down export figures nationally, by state and by congressional district. Ian Hutchinson, USCBC’s manager of communication and publication, said there was a “lot of data to dig into,” offering a guide in how to research reports for states and congressional districts. Hutchinson co-wrote the report with Erin Slawson, the department’s senior manager and senior editor.
“These figures represent a rather complex story of American exports to China which have been buffeted by COVID and travel restrictions, the tariffs initially imposed by President Donald Trump, which, of course, were reciprocated by Chinese tariffs on U.S. exports, the Phase 1 Agreement sanctions and export controls and, of course, the changing and ever-evolving Chinese marketplace,” he said.
All 50 states exported goods and services to China. China is the largest market for four states – Alaska, Nebraska, Oregon and South Dakota.
It’s the second-largest for 15 states, including Iowa, Minnesota, North Dakota, Kansas, Delaware, Georgia, Kentucky, Massachusetts, Maryland, North Carolina, South Carolina, Virginia, Vermont, New Mexico and West Virginia. China is in the top three markets for 38 states, and in the top five for 47, Allen noted.
“How China fares as an export market is indeed very important for a good number of American states,” he said.
Trends are crucial to see how things are headed, Allen said. There are often dramatic swings, he noted as the U.S.-China market has “volatility inherent” built in it.
“We’re seeing a record number of China-related bills in Congress and a general U.S. political atmosphere toward China that is increasingly negative," he said. "No one knows where U.S.-China relations will go from here. The bottom line is that exports to China help a range of industries across the United States stay profitable and competitive. They also support American jobs, from the tourism industry, to farmers and ranchers in Iowa, to chipmakers in Oregon, and to innovative drugmakers in North Carolina.”
He said the report had its limits as it only examines the U.S. side of the ledger. Nor does it look at Americans employed by Chinese-based companies doing business and investing across the United States, Allen said.
Allen also noted a bit of import data, although that was not a focus on the report. He said Chinese good imports were up 16.3% in 2021. The bilateral U.S.-China trade deficit increased during that year by 14.3% to $355 billion.
That shows that U.S. exporters did well, as did Chinese exporters.
Allen said after examining two months of data in 2022, it’s too early to see a clear trend in U.S. exports to China. They were down in January, and slightly up in February.
“Not really anything meaningful to say yet about 2022 U.S. exports,” he said. “In 2022 Chinese exports to the U.S. were down 3.4% in January and down 11% in February. It’s really not useful to make too much of these numbers.”
Allen said although the numbers are useful tools, it’s important to recall the companies, communities and people that are affected by U.S.-China trade, rising costs and uncertain economic times. He highlighted companies in Tennessee, Missouri and Washington state.
It is a highly unstable time, and questions about a resurgence of COVID-19 in China, tensions between the two nations, future trade agreements, including potential additional tariffs on both sides, and the current U.S. political climate all point to potential trouble ahead. China’s involvement in the Russian war on Ukraine, which could lead to U.S. sanctions against Chinese firms, also could alter markets.
“There has never been such uncertainty for companies, for farmers, workers and ranchers,” Allen said.