Another month’s worth of import (and export) price data came out from the Labor Department today (Labor oddly produces all the government’s price-related data), and these July figures once again show that claims of China pricing itself out of U.S. and global manufacturing markets are just more fakeonomics.
The relevant comparisons here are between import prices from China, and import prices for manufactures generally. (U.S. imports from China are dominated by industrial goods. Unfortunately, although the Bureau of Labor Statistics publishes import price data for detailed categories of Chinese manufactures, it doesn’t provide an industry-wide figure for the country.)
According to the new report, prices of Chinese goods sold in America in July fell by 0.19 percent from their June levels. The month-to-month change for all manufactures? They rose by 0.09 percent.
China is underselling manufactures in general on a year-on-year basis, too. Since last July, prices of Chinese products sold in America have risen by 0.29 percent. Prices for manufactures imports overall are up 0.52 percent.
You need to look back considerably longer for a period during which Chinese price competitiveness has weakened. July, 2011 is one reasonable baseline month. Prices of Chinese imports have not risen on net since then – and in fact have inched down by 0.09 percent. Prices of all manufactures imports have fallen by 1.19 percent over the last three years.
At the same time, it’s critical to point out that, like other economic data, import prices and what they say about competitiveness can’t validly be seen in a vacuum. Chinese prices, for example, can be and surely have been influenced strongly by China’s steady shift from lower to higher-value manufactures, which tend to cost more. These products have certainly made striking inroads into the U.S. market, as shown by my import penetration studies.
The bottom line: Combine the import price data with U.S. and Chinese data showing continually improving Chinese trade performance, and you have ever more evidence that, contrary to the claims of U.S. manufacturing cheerleaders like President Obama, manufacturers in the PRC (including those owned by or affiliated with U.S. and other foreign multinational companies) keep getting more, not less competitive versus their rivals in America.