Fast Deceleration of U.S. and Chinese Trade: An alarming truth

Category: International Trade Sub-category: Globalisation
Document type: news

19-Aug-11 | 16:45 IST | Edited by: Sourav Chakraborty

The international trade data related to US economy has come up with some very interesting and alarming truths. It has been said that changes in the growth rates of US imports to and from China can be a very good indicator of the economic health of both of the countries. It is a common fact that with growth of an economy, there will be a tendency of bringing in goods and services at a faster and growing rate, while the opposite mechanism follows when the country is decelerating.

Annualized Growth Rates of US-China Trade: January '85 to June '11

The above chart shows the present economic conditions of US and China through June, 2011. This chart shows that both the U.S and Chinese economy is facing slower rates of trade growth, with the trend likely to follow in the near future. This comes as a shock since China is tipped to be one of the fastest growing economies. The rate at which China is pulling in goods and services from USA has shown a steep fall when compared to the levels of 2010. However it is more surprising that the level of Chinese exports to USA has shown severe decline.

It can be observed that the growth rate of US imports from China is at a near-recessionary level thus confirming the declining economic situation of the US through the first half of 2011. On closely following the recent trend back to its pinnacle, it can be easily seen that the decline started from the mid-2010.

As can be seen from the receding employment scenario of the US, there has been no notable improvement in the US economy since that time, for all practical reasons.

External Links:
USA's Economy - The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010, approximately a quarter of nominal global GDP.

China's Economy - The People's Republic of China (PRC) ranks since 2010 as the world's second largest economy after the United States. It is one of the world's fastest-growing major economies, with consistent growth rates of 5% - 15% over the past 30 years.

US-China Business Council, Inc. (USCBC) - USBC is a private, non-partisan, non-profit organization of roughly 220 American companies that do business with China. USCBC's mission is to expand the US-China commercial relationship. It favors constructive engagement with China to eliminate trade and investment barriers and develop a rules-based commercial environment that is predictable and transparent to all parties