Major US Exports to China: Scrap Copper and Metals, and Treasury Bonds

At the China’s Opening Up New Stage Forum held on July 6, JianDong Ju, director of the international economic research center at Tsinghua University, said that there are serious structural distortions in U.S. exports to China. There are few high-tech exports but a large amount of scrap metal exports, treasury bonds, agricultural products and aircrafts.

The total Sino-U.S. trade amount has been increasing at an annual rate of 20 percent for the past 20 years. According to an estimate made by China Customs that while China’s imports from the U.S. increase every year, the percentage of U.S. imports is declining — from 9.7 percent in 1989 to 7.2 percent in 2008.

The International Economic Research Center at Tsinghua University’s data show that of the U.S. total global exports, the export of steel scrap, copper scrap and aluminum scrap to China accounted for 75 percent, 61 percent and 61 percent, respectively. These percentages rank as No.1, 2, and 3 of the total U.S. exports to China. If we take the U.S. export of treasury bonds into consideration, those account for 63 percent of the total U.S. commodity and debt export.

“The U.S. has a comparative advantage in its high-tech products, but its total number of exports to China is too small,” said JianDong Ju. “Developed countries led by the U.S. control high-tech exports to China. But mainstream U.S. economists claim that the trade imbalance between China and the U.S. is caused by undervalued RMB, ignoring the distortions in the trade structure.

“The export advantage of a country with an economy based on high-tech industry lies in technology. But [the U.S.] restricts the export of thousands of advanced technologies to China; [an alternative restriction method] is to have China fill out a thick wad of declarations.” Earlier, at the 2011 Sino-America Chamber of Commerce Appreciation Dinner, the Minister of Commerce, Deming Chen, called on the U.S. to relax its export controls and expand the export of high-tech products to China.

In addition, Jiandong Ju recommends that the East Asian Regions, including China, Korea and Singapore, unite together to form the third world [economic] pillar alongside the North American Free Trade Area and the European Union.