‘Massive Influx’ of Chinese Electronics to US Is Trade Deficit’s ‘Primary Driver,’ Says Report
The “massive influx” of Chinese-sourced computers and electronics to the U.S. has been the “primary driver of the bilateral trade deficit” between those countries, said a U.S-China Economic and Security Review Commission report Thursday. It mentioned neither the Trump administration’s implemented or proposed Trade Act Section 301 tariffs against China nor Chinese retaliatory measures taken or threatened against the U.S.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
U.S. imports of Chinese computer and electronics products “ballooned” to $184 billion in 2017 from $33 billion in 2002 -- a 458 percent increase -- and were “by far” the largest category of shipments from China last year, comprising 37 percent of total imports from that country, said the report. China in the past two decades “has become a powerhouse” in the manufacture and assembly of computer and electronics goods, it said. “Low labor costs, a central position in East Asia, and preferential policies in China’s special economic zones caused a structural readjustment of global supply chains and enabled China to become the world’s hub for the production of laptops, phones, and data storage devices.”
In 1990, 47.1 percent of manufactured imports to the U.S. came from countries in the Asia-Pacific region. Though 25 years later, in 2015, this figure had “barely moved,” hovering at 46.8 percent, the share of U.S. imports from China rose to 26.1 percent from 3.6 percent, it said. The “contribution” of the computer and electronics sector to the U.S. trade deficit with China peaked in 2013 at 44.9 percent and “remained constant” at 44.6 percent in 2017, it said.
China “has come to dominate the world’s computer and electronics markets through access to cheap labor, regional supply chains, large economies of scale, and a huge domestic market,” said the report. Though China sources most of its imports from countries in the Asia-Pacific region, China’s tech sector “relies on imports of higher-value, advanced electronics” from the U.S., mainly semiconductors, it said. U.S. semiconductor exports to China reached $6.9 billion in 2017, a 20 percent increase from 2011, it said.
Chinese “protectionist measures” limit U.S. export growth to the country, said the report. The Chinese government uses regulatory powers to advantage domestic companies over U.S. exporters, it said. "The Chinese government’s drive to create and acquire more intellectual property and to claim domestic and global market share for Chinese companies in cutting-edge industries means more unfair competition for U.S. importers and exporters over a larger portion of value-added industries."
Since joining the World Trade Organization, "Chinese producers have gained considerable market share domestically and abroad," said the report. "Now that Chinese companies in these industries are globally competitive, there is less need to protect them. The next generation of industrial policy initiatives -- such as Made in China 2025 -- aim[s] to capture domestic and global market share in higher-value-added sectors, like robotics, advanced machinery, new-energy vehicles, and semiconductors."