Friday, February 15th 2013 - 05:36 UTC

China became in 2012 the world’s biggest trading nation surpassing the US

China surpassed the US to become the world's biggest trading nation last year as measured by the sum of exports and imports of goods, a milestone in the Asian nation's challenge to the US dominance in global commerce.

Deng Xiaoping following a historic visit to the US in 1978 changed the focus of China from isolation to world markets

US exports and imports of goods last year totaled 3.82 trillion dollars, the US Commerce Department said last week. China's customs administration reported last month that the country's total trade in goods in 2012 amounted to 3.87 trillion dollars.

China's increasing influence threatens to disrupt regional trading blocs as it becomes the most important commercial partner for countries including Germany, which will export twice as much to China by the end of the decade as it does to neighboring France, said Goldman Sachs's Jim O'Neill.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner” said O'Neill, chairman of Goldman Sachs's asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy.

“At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

When taking into account services, US total trade amounted to 4.93 trillion dollars in 2012, according to the US Bureau of Economic Analysis. The US recorded a surplus in services of 195.3 billion last year and a goods deficit of more than 700 billion, according to BEA figures. China's 2012 trade surplus, measured in goods, totaled 231.1 billion. The US economy is also double the size of China's, according to the World Bank.

In 2011, the US GDP reached 15 trillion dollars while China's totaled 7.3 trillion. China's National Bureau of Statistics reported January 18 that the country's nominal GDP in 2012 totaled 51.93 trillion Yuan (8.3 trillion).

“It is remarkable that an economy that is only a fraction of the size of the US economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. “The surpassing of the US is not because of a substantially undervalued currency that has led to an export boom,” said Lardy, noting that Chinese imports have grown more rapidly than exports since 2007.

The US emerged as the preeminent trading power following World War II as it spearheaded the creation of the global trade and financial architecture and the UK began dismantling its colonial empire. China began focusing on trade and foreign investment to boost its economy after decades of isolation under Chairman Mao Zedong. Economic growth averaged 9.9% a year from 1978 through 2012 launched by Deng Xiaoping.

China became the world's biggest exporter in 2009, while the US remains the biggest importer, taking in 2.28 trillion dollars in goods last year compared with China's 1.82 trillion of imports.

China was last considered the leading economy during the height of the Qing dynasty. The difference is that in the 18th century, the Qing Empire unlike rising Britain didn't focus on trade.

The Emperor Qianlong told King George III in a 1793 letter that “we possess all things. I set no value on objects strange or ingenious, and I have no use for your country's manufactures.”

While China is the biggest energy user, has the world's biggest new car market and the largest foreign currency reserves, a significant portion of China's trade involves importing raw materials and parts to be assembled into finished products and re-exported, an activity that provides “only modest value added,” Eswar Prasad, a former International Monetary Fund official who is now a professor at Cornell University in Ithaca, New York, said.

Last month China's trade expanded more than estimated, with exports rising 25% from a year earlier and imports increasing 28.8%, government data released this week showed. However economists from some banks in the Pacific basin recently questioned the veracity of China's export data after the Customs administration reported an unexpected 14.1% export gain.
 

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1 Anglotino (#) Feb 15th, 2013 - 06:39 am Report abuse
”The Emperor Qianlong told King George III in a 1793 letter that “we possess all things. I set no value on objects strange or ingenious, and I have no use for your country's manufactures.”

Now which troll that expounds on autarky does this sound like?

China's biggest problem is that it is not innovating. Being the world's sweatshop doesn't help it to break through the middle income trap.

Additionally, China's demographics are nothing but disasterous. The fall in its youth cohort to the same level of Japan is telling for a much poorer country. Not to mention that its working age cohort is just about to start a very fast decline.

China will be big. China will be important. But China will not be rich before it grows old.
2 The Chilean perspective (#) Feb 15th, 2013 - 08:04 am Report abuse
China graduates 600000 new engineers every year, their research and development is world class their financing system is bloated with foreign reserves and their willingness and ability to back new projects is unstoppable.
They already are the worlds biggest economy, no doubt, the US tops the list only because of all the financial derivatives, stocks, bonds, and other wall st. shenanigans. These are just numbers on a monitor and do nothing to make America stronger in fact they are destroying the United States. China on the other hand is doing a version of what made America great trading with everyone and making and selling real stuff.
3 Captain Poppy (#) Feb 15th, 2013 - 11:09 am Report abuse
With almost 2 billion people....surprise , surprise. The number one population SHOULD be the number one economy, it's only logical. Now, will China balance some regulations and deal with their environment that is now becoming their neighbors problems too.
4 troy.tempest1 (#) Feb 15th, 2013 - 02:44 pm Report abuse
it has nothing to do with the 2 billons stinky chinese assholes....
the USA corporations moved their business to China....
most of everything in the USA has a label made in China
I don't buy NOTHING made in China
5 yankeeboy (#) Feb 15th, 2013 - 02:57 pm Report abuse
It will all work until there is a Revolution. It reminds me of the 80s with Japan taking over, 00s Russia taking over 10s Brazil taking over yada yada yada

You can't even breath in Beijing.

Just give enough time to implode.
6 Nostrolldamus the 10th (#) Feb 15th, 2013 - 03:15 pm Report abuse
Nobody suggested that the only path is for Japan, Russia, China, India, Brazil to overtake the USA. It will be the USA undertaking Japan, Russia, China, India, Brazil LOL! We already see it now:

50 years ago you could have surpluses by tweaking discretionary spending, today you have to plunge your economy to a massive depression by cutting all essentials and military to achieve the same.

50 years ago you were a net creditor, now you are world's biggest net debtor.

50 years ago you were 50% of world's GDP, now you are 19% and falling.

50 years ago you dominated world culture. Now no one follows US music, and Hollywood's grip is slowly eroding.

50 years ago you could put men into space, now you hitch rides with Ruskies.

50 years ago you had rising middle class and incomes, now you have falling middle class and incomes

So none of those nations need to catch UP. They'll just catch YOU on the way DOWN. ;)
7 jakesnake (#) Feb 15th, 2013 - 03:31 pm Report abuse
Nice attempt at nonsense Tobi. Along with all of those engineers they're graduating and all of the other wonderful things going on in China, they have 40 million people living in caves and ~600 million people living on $2/day. Can that many people be brought into the Chinese “middle class” organically? Maybe, but not likely. Let's say a third of them can be. That leaves 400 million have-nots. How much government spending is going to be necessary to get that many people into the middle class, $3000/person, $4000/person? Then, you're talking in the trillions of dollars of government spending. I know the world desperately wants China to become the new “world power”, but not everything is coming up roses there.
8 Captain Poppy (#) Feb 15th, 2013 - 03:31 pm Report abuse
It only shows that other nations are coming to sit with the USA and rgenturd is not one of them lol
9 Nostrolldamus the 10th (#) Feb 15th, 2013 - 03:38 pm Report abuse
@8

Have we ever wanted to have anything to do with the USA? Check our history.

By far most anti-USnation in the Americas!

@7

I never have said things in China are “rad”. Or in any of the other countries. But the difference is the USA. China, Brazil, India, Russia had many of the same problems back then as today, but they actually have improved.

The USA had few of the problems it has today, and their stats are getting WORSE.

My assessment may hurt some egos, but no one can dispute the points I made @6.
10 Captain Poppy (#) Feb 15th, 2013 - 03:42 pm Report abuse
The why is your government pushing to sell the USA bife and limons? You last “assessment” from mendoza hurts no ones egos as your opinion is meaningless from the valley of grapejuice, mendoza.
11 jakesnake (#) Feb 15th, 2013 - 03:50 pm Report abuse
“Rad” Tobi? Umm, this isn't 1989. You may want to start a Netflix subscription to get some more up-to-date American movies so you know which slang to use. Got it sock hop?
12 Nostrolldamus the 10th (#) Feb 15th, 2013 - 04:17 pm Report abuse
No kidding, that's why I used “quotations”. You know, if you remember your language class (if you went to it), quotations can be used to highlight that something is used in sarcasm, irony, or misplaced in the context.
13 jakesnake (#) Feb 15th, 2013 - 04:22 pm Report abuse
Again, nice try Tobi. You're an excellent “tryer”. You're an amusing little dude.
14 Ayayay (#) Feb 15th, 2013 - 06:04 pm Report abuse
@9 hahahahaha. Check not history, but TODAY! Argentines are one of the top ten citizens to apply for U.S. visas IN THE WOOOORLD!!!!!!
15 Nostrolldamus the 10th (#) Feb 15th, 2013 - 06:34 pm Report abuse
@14

Yes it is called “tourism”, you IDIOT!
16 Captain Poppy (#) Feb 15th, 2013 - 07:15 pm Report abuse
Why do they want to come to the evil empire?
17 Nostrolldamus the 10th (#) Feb 15th, 2013 - 07:20 pm Report abuse
Because they are weak minded people that like “brands” so they go to Miami to shop at the outlet malls there for “brand” jeans and sneakers, and electronics. They come back with carts of stuff, and some do trips to re-sell stuff here. I know a couple of people that do that.

I don't buy anything American or European so I don't understand that compulsion.
18 ChrisR (#) Feb 15th, 2013 - 07:38 pm Report abuse
The big problem facing China is the growing wage bill because the present workers realise they have been had by 'entrepreneurs' not paying them commensurate with the profits.

Quality, or the lack of it, has seen some companies in the UK bringing production back home due to customer complaints. This was the case with one of the best known companies in Birmingham but came too late to save the migration of customers to other companies in the UK who did not move to China.

That is the thing about quality. Those who know what they want ensure they are supplied it with the cost coming along as an agreed item.
19 yankeeboy (#) Feb 15th, 2013 - 08:07 pm Report abuse
Lots of mfg is coming back to the USA too due to our cheap nat gas/electricity and quality.
China worked for awhile, then it didn't I don't see them inventing too much that we want just acting as beasts of burden like every other mfg country.

I would rather invent the ipad than mfg it any day.
20 Captain Poppy (#) Feb 15th, 2013 - 09:23 pm Report abuse
Yankee the bureacracy and logistics area also becoming a quagmire for manufacturers there as well.
21 Anglotino (#) Feb 15th, 2013 - 09:24 pm Report abuse
@18 ChrisR
Correct! Chinese labour arbitrage is falling. The increase in labour costs together with transport means places like Mexico and some parts of Eastern Europe are cheaper.

@3 Captain Poppy
China doesn't have 2 billion people. It is just over 1.3 billion. It will peak in the next... oh 10-15 years and then fall. The lowest UN estimate puts China's 2100 population at ~800 million. However even that seems a bit optimistic after the last census.

Indeed China is ageing FASTER than Japan did. And look at where Japan has been stuck for the last 20 years as its population aged and grew even more risk adverse.

But you are right, the US helped create the ability for other nations to rise. China is growing because of the international trading and political architecture. Soon it will have to assume its rightful place in supporting this.

@2 Chilean Perspective
China might churn out more engineers than anyone else but they are not employable. Quantity does not equate to quality. The Chinese education system by its very nature does not engender free thinking and innovation. Such traits are dangerous to a government that depends on the status quo. But vital to innovation.

And as for China growth statistics, they are are suspect as Argentina's. Look up alternative growth indicators like credit and electricity usage and they don't match up with the hype. China's growth has been partial built on credit and no one even knows the true size of government debt. Some estimates have it HIGHER than the US.

And while foreign reserves are nice and high, they can't be used because they will affect their currency which will skyrocket and with an exporting mercantilist economy, that would pretty much crash it.

China will be a big economy but is heading for the middle income trap. Chile is currently reorientating to avoid this issue itself. Much more successfully I'll add.

It could be worse, it could be slipping out if it like Argentina.
22 Captain Poppy (#) Feb 15th, 2013 - 10:00 pm Report abuse
Correct, I kn ow that. I tend to round and in the case when you are talking billions, the result is not good.
23 The Chilean perspective (#) Feb 15th, 2013 - 10:42 pm Report abuse
@ 7 jakesnake.
My name is TCP not Tobi.
Firstly we must put China's development into context. Den Xiaoping began the arduous task of integrating the former world's number one economy back into the global fold very recently signing the historic accords with Jimmy carter on the 31st January 1979.
China's growth since then has been unprecedented in human history, launching almost 400 million people out of poverty and creating the worlds highest number of “rich” people in only a few decades. The level of wealth transfer we are witnessing will go down in the annals of history as the human race's most important “social” achievement and by the time it has wound down in another 30 or 40 years we will have a power that will eclipse all that has come before it.
This process has produced almost incredible numbers in every field. It must be noted that the government is run by engineers not lawyers as in most western countries.
1. They are quadrupling the number of graduates every year.
2. Foreign reserves of a staggering 3.4 Trillion US Dollars, this is about 700 billion more than all the money in circulation in the USA. Yes every bank, every money box, every cash register, every wallet and purse (have I blown your mind yet?)
3. Infrastructure projects that are focused on growth and progress and not focused primarily on environmental issues, they get things done.
4. A new power plant is connected to the grid every 5 days, guaranteeing their capability for growth.
There are many, many more but I won't bore you, suffice to say that if they were to float the Yuan it would probably appreciate from 6 to 1 against the US dollar to 1 to 1. After all the US is “technically” bankrupt with total assets of 93 trillion and liabilities of a staggering 122 trillion.The government alone has a debt of 16.5 trillion and has no hope of ever paying it off since it only collects 2.4 trillion in revenues. Not to mention the interest which is 3.3 trillion and growing.
24 jakesnake (#) Feb 15th, 2013 - 10:53 pm Report abuse
Yep, I know who Tobi is trust me. I should have used the @ in front of, and then split, my reply. And I'm very familiar with Chinese history, both current and 20th Century, but I appreciate your input.

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