Three really important facts concerning trade surplus, direct investment and exports were discussed by the Financial Times yesterday. They relate directly to the hotly debated topic of U.S. – China trade relations and jobs. Any lessons here for Donald Trump?
The U.S. has not had a total trade surplus since 1975 and only a minimal one since before 1961. This is long before China emerged as a super economy. (Chart below) And the U.S. has had a surplus in services since 1970.
Foreign direct investment in the U.S. and ‘reshoring‘ has created more than 250,000 new jobs in the U.S. last year (2015). (Chart below) A huge increase since 2007. Much of this has actually been because of Chinese foreign investment.
U.S. exports to China from 2009-2014 supported over 350,000 new jobs. (Chart below) China is a gigantic domestic market for consumer and capital goods. And it’s growing.
What’s my conclusion?
Simple. Understanding U.S. – China trade relations is a lot more nuanced than we hear during this political season. It also involves understanding some very basic facts about global trade. The U.S is dependent on a viable and vibrant global trading system. So are American states, cities, counties and U.S. workers. Needless to say, ‘Trump the Tradester,’ who is from the greatest global city in the world and center of global commerce, is glaringly off the mark.
………….. “Donald Trump and China and US Jobs.” Financial Times (March 24, 2016).