Jan. to Aug. 2023 82%
2022: 91.5%
2021: 93%
2017: 93%
The Census’ monthly trade figures, now complete through August 2023, show imports down by about $136 billion or 6% as compared the first eight months of 2022. (Last year: $2.21 trillion; this year: $2.08 trillion.) Nearly two-thirds of this decline is in specifically Chinese-made goods, so the worldwide 6% drop combines a remarkable 24% fall in imports from China with a modest 2% decline from the rest of the world. The figures are:
Imports: -$136.3 billion = -6%
From China: -$89.6 billion = -24%
From all other countries: -$46.7 billion = -2%
Some thoughts on possible explanations below, but first a set of mini-case studies covering four consumer goods: laptops, smartphones, TV sets, and toys. Together these account for $19.5 billion of the $89.6 billion drop in imports from China, and about a seventh of the worldwide drop.
1. Laptops: Laptop computers accounted for $48 billion of America’s $526 billion in imports from China in 2022. This Chinese-made $48 billion in turn made up about 92% of a worldwide $52 billion. Counting individual devices, Americans bought 111.5 million laptops last year from three main sources: 102.7 million from China, 5.4 million from Vietnam, and 2.5 million from Taiwan. Comparing Census’ Jan.-August figures for 2022 with those for 2023, the total laptop-import count is down from 76.4 million to 65.8 million, with Chinese-assembled laptops specifically off from 71.1 million to 56.4 million. By contrast, Vietnam’s laptop shipments, have more than doubled from 3.3 million in Jan.-Aug. 2022 to 7.2 million so far in 2023. Taiwan’s have stayed the same at 1.4 million. So here, the drop in imports is not worldwide, but wholly Chinese..
2. Smartphones: The phone pattern is similar — overall U.S. buying down; buying from China especially down; one rival (though not the same one) rising fast. Specifically, 2022’s 173 million smartphone arrivals included 134.9 million from China, 30.4 million from Vietnam, 4.0 million from India, and another 4.0 million divided among Hong Kong, Korea, and Japan. So far this year (again comparing Jan.-August. data), phone imports are down from 115.8 million to 94.3 million, with Chinese-assembled phones accounting for 12.2 million of the total 21.5-million drop. In contrast to laptops, next-door Vietnam is even further off its 2022 pace — from 24 million phones to 11.5 million, or more than half. India is the fast-growing rival here, up from 2.5 million phones to 6.8 million.
3. TV sets: TV-set data again repeat the pattern — total imports down, China down especially fast, and a competitor rising. TV imports from China are down by 40.7% in dollars — from $7 billion to $4.4 billion — and 35% in set-count, from 43 million to 27.9 million. Meanwhile, imports of TVs from Vietnam have jumped from 3.8 million in 2022 to 5.7 million in 2023. Imports from Mexico are up too (though not dramatically) from 19.1 million to 19.6 million.
4. Toys: Finally, a less chip-and-solid-state-electronics-heavy example Overall, U.S. toy imports have dropped by about a third, from $13.8 billion in Jan.-Aug. 2022 to $9.1 billion in Jan.-Aug. 2023. Almost all the decline is in Chinese-made toys, down from $11.0 billion in Jan.-August 2022 to $6.9 billion in 2023. Here, though, while China’s “share” of U.S. toy imports has drifted down (from 83% in 2021 to 80% in 2022 and 76% so far in 2023) no single competitor seems to be rising in China’s place. Vietnamese toy shipments are down by 34%, Indonesia’s by 22%, and the non-China world overall by 20%. Mexican toy exports are a modest exception, up 8% in percentage terms, but in dollars, this is only about $40 million.
What to make of this? Four possible explanations:
1. Tapped-out American shoppers: One contributing factor is purely American. After two years of post-Covid shopping, Americans have restocked their wardrobes, replaced their phones, and TVs, and don’t need more just now.
This is plausible at least in part: With China the principal source of these things, any drop will naturally show up mainly in trade with China. But this doesn’t seem like the whole story — the simultaneous jumps in laptop and TV imports from Vietnam, and in phone imports from India, suggest buyers finding alternative if smaller Asian sourcing sites. So analysts while not discounting explanation 1 should also be thinking about explanations 2, 3, and 4.
2. Structural change reflecting geopolitics and trade conflict: After holding up through 2018-2022, despite tariffs, retaliations, spikes in diplomatic tension, and export controls, U.S.-China trade finally began to buckle this year.
3. Structural change reflecting Chinese domestic policies: After three years of chronic zero-COVID factory closures and intensified political pressure on foreign firms, China’s competitiveness has badly eroded and buyers are looking elsewhere.
4. Alternative structural change reflecting intra-Asian integration: Or, finally, China’s competitiveness maybe hasn’t eroded per se, but electronics supply chains are becoming more elaborate and specialized. In this hypothesis, final consumer-goods assembly (having shifted to China in the 2000s) now moves to neighboring countries as China takes up a new role as a components and engineering skills supplier, using the newly implemented Regional Comprehensive Economic Partnership agreement to cut costs.
Data:
Census’ monthly figures.
… and country-by-country data.
U.S. policy:
Treasury Secretary Janet Yellen on de-risking, friend-shoring, non-“decoupling,” and the future U.S-China economic relationship.
And some perspectives:
WTO economists wonder whether trade flows are beginning to illuminate the early stages of “geopolitical blocks,” in which some countries trade more with China, and others more with the United States.
PIIE’s Adam Posen sees the end of the Chinese economic miracle.
Former World Bank director for China and current Singapore-based academic Bert Hofman, writing for the Asia Society Policy Institute, looks to domestic economic mistakes.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
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