Obama and the Trade Deficit with China

By Ricardo Rivera September 28, 2015

rrivera@ufm.edu

Translated from Spanish by Daniel Contreras

On September 25, President Obama and President Xi gave a joint press conference in front of the White House. Obama was the first to speak. After welcoming Xi Jinping and referring to how much both have worked to increase cooperation between the United States and China, he said, “Since I took office, American exports to China have nearly doubled and now support nearly one million American jobs.” Clearly, Obama was pointing out what he considered to be one of the achievements of his administration, but a look at the numbers tells a different story. In 2009 US exports to China were $69 billion, in 2014 this number grew to $123 billion. However, Chinese imports in 2009 totaled $269 billion and in 2014, $466 billion.

 

Balance of trade USA to China 28092015

Graph 1. Source: https://www.census.gov/foreign-trade/balance/c5700.html

 

A trade deficit (or surplus) does not necessarily reflect the health of an economy, in fact the United States has had a trade deficit with China since 1985, but it does remind us how numbers can be presented in a ways that fail to show what they actually mean.

 

Balance of trade China USA 28092015

Graph 2. Source https://www.census.gov/foreign-trade/balance/c5700.html

 

When it comes to the one million jobs President Obama mentions, this was a trend established before his administration and in line with growing exports. However, this number will likely go down as the trade deficit continues to increase. In July 2015, imports from China increased 5.31% compared to July 2014, meanwhile exports decreased 3.57% during the same period. But this is not necessarily bad news for the US economy.

 

yoY imports and exports 28092015

Graph 3. Yearly Accumulated Change in Imports/Exports. Source: https://www.census.gov/foreign-trade/balance/c5700.html

 

Get our free exclusive report on our unique methodology to predict recessions

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


YOU WILL RECEIVE OUR WEEKLY UPDATES

Ricardo Rivera

Ricardo Rivera

Ricardo studied law at Universidad Francisco Marroquín. He is a teaching assistant at UFM’s Henry Hazlitt Center for introductory economics courses and a class on the philosophy of Hayek.

He is also a teaching assistant at UFM’s School of Economic Sciences for courses on future scenarios, ethics, and debate. At Universidad de San Carlos (USAC) he is a teaching assistant for the law and economics class in the master’s program in intellectual property. He is partner and general manager of the corporate law firm ALISA.

Get our free exclusive report on our unique methodology to predict recessions

Leave a Comment





Don’t Miss Any of Our Articles

Receive our latest articles and reports in your inbox.

No thanks. At the moment I prefer not to receive anything. »

logo H UFM
instituto-juan-de-mariana-400

Edificio Académico E-505
Calle Manuel F. Ayau (6 Calle final), zona 10
Guatemala, Guatemala 01010
Telephone: (+502) 2338-7723/24
mtrends@ufm.edu

This project is made possible by a grant from the John Templeton Foundation | © 2015 - 2017 Universidad Francisco Marroquín | webmaster@ufm.edu | (cc) BY-NC-ND