The Truth About Chinese-U.S. Trade

With all the hoopla in the media about all things Chinese—exports, Chinese investors in the United States, the U.S. trade deficit with China, and so on—we thought this myth-exploding article was worth the read. It’s aimed at investors, but relevant to anyone interested in the U.S. economy and how our relationship with China really works. For example, the U.S.’s foreign direct investment (FDI) in China so far this decade is only a third of what we’ve put into Ireland and Germany.

The U.S. also enjoys far greater access to the Chinese market than the other way around:

When it comes to foreign direct investment — or the corporate presence of the U.S. in China versus China’s presence in the U.S. — the U.S. enjoys an overwhelming advantage over the mainland. In 2006, for instance, U.S. foreign investment in China on a historic cost basis totaled $22.2 billion, a figure well in excess of China’s investment stakes in the U.S. The latter totaled just $600 million last year — a fraction (2.7%) of U.S. investment in China.

Another interesting fact: the oft-quoted massive trade deficit the U.S. suffers doesn’t take into account foreign affiliate sales—U.S. companies selling products locally within China. “At the end of the day, China does sell more to the United States, but not by the lopsided margin some might suppose.”

Read all ten facts about Chinese-U.S. trade at Kiplinger.

“The Top 10 Things Every Investor Should Know About U.S.-China Relations” [Kiplinger]
(Photo: Getty)