On Tuesday, I presented the latest data showing that its trade performance makes the United States look like a third world country, with raw materials sectors representing most of its biggest trade winners – and increasingly so.
Today, let’s look at America’s trade with China, which is a country with major first and third world characteristics, and see if U.S. producers perform any better. The answer? Only a little.
Here’s the list of the nation’s top ten export winners in China trade last year – the sectors of the economy that racked up the biggest trade surpluses with China:
1. Soybeans: $12.35 billion
2. Autos & light trucks: $8.24 billion
3. Waste and scrap: $5.49 billion
4. Crude oil & natural gas: $4.43 billion
5. Plastics materials & resins: $2.42 billion
6. Liquid natural gas: $2.42 billion
7. Pulp mill products: $1.69 billion
8. Sawmill products: $1.62 billion
9. Non-poultry meat products: $1.41 billion
10. Timber & logs: $0.97 billion
Four of these are considered commodities in the North American Industry Classification System (NAICS), the U.S. government’s main scheme for slicing and dicing the economy. Waste and scrap might as well be, and (processed) non-poultry meats seem pretty close. Further, the NAICS definition of sawmill products makes clear they add little value to the wood they work with.
As with the global list, the China list excludes aerospace products, since Washington has acceded to Boeing’s insistence that it not release information that distinguishes between final products on the one hand,, and their parts and components on the other.
Still, arguably, this China list is even less impressive than the list for the world at large in terms of containing items that have historically led to big productivity gains, rapid technological progress, and lofty living standards.
Now here’s the China list for 2007 (which can include disaggregated aerospace numbers):
1. Aircraft: $6.35 billion
2. Waste and scrap: $7.26 billion
3. Semiconductors: $4.37 billion
4. Soybeans: $4.10 billion
5. Plastics materials & resins: $2.28 billion
6. Cotton: $1.46 billion
7. Non-poultry meat products: $0.88 billion
8. Autos & light trucks: $0.63 billion
9. Pulp mill products: $0.59 billion
10. Prepared or preserved poultry: $0.57 billion
The NAICS system considers two of these export categories as raw materials. In terms of value creation, I’d add the separate meat and poultry sectors, along with waste and scrap. That actually produces fewer low-value sectors (six) than the 2017 list (seven).
It’s also compelling evidence that as the Trump administration continues its efforts to try to fix America’s trade problems with China, it should focus at least as much on the composition of this trade as well as the size of the bilateral deficits.