Trade News: China Trade Issues, Trade Surplus & Retail Growth

From International Trade News: China-U.S. Trade Issues. U.S.-China economic ties have expanded substantially over the past three decades. The rapid pace of economic integration between China and the United States, while benefiting both sides overall, has made the trade relationship increasingly complex. Some points explored are: 

  • China’s purchases of U.S. Treasury securities -nearly $1.2 trillion at the end of 2010- help keep U.S. interest rates relatively low.
  • Policymakers are concerned that China’s large holdings of U.S. government debt may give it leverage over the United States.
  • Many U.S. production facilities have relocated to China, resulting in the loss of thousands of U.S. manufacturing jobs.
  • China’s refusal to allow its currency to appreciate to market levels, its mixed record on implementing WTO obligations, its relatively poor record on protecting intellectual property rights, and more.

More on China from Business Week: 3 Reasons Why The U.S. Should Quit Worrying About China’s Trade Surplus. Three points are outlined.

  1. Surpluses don’t last forever. China’s currency is now at less than 6.42 to the dollar, a new high for the RMB. Exports are strong, but as the currency’s value rises, those products become more expensive.
  2. The value added reality check. A full 88.5% of US consumer spending is spent on goods and services made in the US, while China gets only 2.7% of American consumer dollars.
  3. The demand side in the US, when domestic demand increases, so do purchases of imported products. The US economy doesn’t look so hot at the moment, so to the extent to which a drop in aggregate demand will translate to lower China imports to the US.

From Euromonitor. In 2011 – It’s China vs. Japan in Asia’s Retail Scene. 2010 saw China overtake Japan as the world’s second largest economy, and not surprisingly, China emerged with the biggest increase in representation in the Retail Asia-Pacific top 500 rankings, taking 124 of the 500 positions. The 124 Chinese retailers listed posted an amazing 14.5% growth in retail sales from 2009-2010, and accounted for US$139 Billion in total sales. 2010 also saw a Chinese retailer break through the Japan stronghold in the top 10 list.

Also from Euromonitor: Coca-Cola to Invest US$4 Billion in China.  This new investment is expected to be spent on new infrastructure, partnerships, brand building and sustainability programs. Coca-Cola recorded 26% growth (compared to PepsiCo’s 13%) in retail value sales of soft drinks in China in 2010.

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