Trade Analysts See New Demand for U.S. Goods in China

While China is the largest provider of imports to the U.S., it is also becoming a major destination for U.S. exports, noted a well-known economist.

According to IHS Global Insight U.S. Economist Gregory Draco, A new trade paradigm is developing.

“The trade relation between the U.S. and China is evolving rapidly as the Chinese economy pursues its rapid expansion,” said Draco in an interview. He also noted that with just a few months to go before the US elections, the hot topic of China is as popular as ever.

“In these pre-election times, policymakers on both sides of the aisle are showing their desire to protect Americans from all possible ‘evils’ whether geopolitical or economical, real or imaginary,” he said.

Indeed, as recently as October 2011, some members of Congress tried (and failed) to pass a bill authorizing retaliatory protectionist trade measures against countries whose currencies were viewed as “misaligned” instead of “manipulated” (a more stringent measure).

“It is a common misconception that the undervalued Yuan is only a source of damage to the U.S. economy,” said Draco. “While this simplistic view may appeal, it does not capture the full extent of the bilateral relation.”

Draco said another common misconception is that the U.S.-China trade relation is wholly unilateral, involving only the U.S. importing “cheap” goods from China. But, China is also becoming a major destination for U.S. exports.

As China enters the Year of the Dragon, its economy has slowed down. IHS Global Insight expects China’s real GDP to increase 8.2 percent in 2012 and 8.5 percent in 2013.

“This slower rate of growth is not without consequence for global growth as it involves the second largest economy in the world,” said Draco. “Furthermore, tentative signs of the Chinese slowdown can be discerned in the most recent U.S. export data.”

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