Author: Wen Jin Yuan
International Trade Analyst
Change in 2014 from 2013:
- U.S. total exports: Increased by $2.3 billion (2 percent) to $124.0 billion
- U.S. general imports: Increased by $26.2 billion (6 percent) to $466.7 billion
- U.S. trade deficit: Increased by $23.9 billion (8 percent) to $342.6 billion
The value of U.S. total exports to China increased by $2.3 billion (or 2 percent) to $124.0 billion in 2014 (see table CN.1). The three sectors that contributed the most to this growth were transportation equipment (up by $3.9 billion), electronic products (up by $0.6 billion), and machinery (up by $0.5 billion). However, large declines in the value of U.S. total exports of energy-related products and of minerals and metals, as well as a more modest decline in the value of exports of agricultural products, tempered the growth in U.S. exports to China.
|U.S. total exports:|
|Chemicals and related products||13,607||15,396||14,433||14,536||14,719||183||1.3|
|Textiles and apparel||1,115||1,279||1,285||1,388||1,274||-114||-8.2|
|Minerals and metals||11,110||14,084||12,461||12,238||10,967||-1,270||-10.4|
|U.S. general imports:|
|Chemicals and related products||21,338||25,700||28,022||29,470||31,874||2,404||8.2|
|Textiles and apparel||42,195||44,884||45,066||46,469||47,204||735||1.6|
|Minerals and metals||22,293||25,369||27,034||27,786||30,922||3,137||11.3|
|U.S. merchandise trade balance:|
|Chemicals and related products||-7,731||-10,304||-13,589||-14,934||-17,155||-2,221||-14.9|
|Textiles and apparel||-41,080||-43,605||-43,782||-45,082||-45,931||-849||-1.9|
|Minerals and metals||-11,183||-11,285||-14,573||-15,548||-19,955||-4,407||-28.3|
Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data. Sectors are ordered by the level of processing of the products classified within each sector.
The largest and most rapidly expanding export sector in 2014 was the transportation equipment sector, which rose by $3.9 billion to $29.9 billion (a 15 percent increase from 2013 to 2014). This sector also accounted for 24 percent of U.S. total exports to China in 2014. Sector exports grew because of large increases of U.S. exports of motor vehicles (up by 29 percent, or $2.5 billion) and aircraft, spacecraft, and related equipment (up by 11 percent, or $1.3 billion) (see table CN.2).
|U.S. total exports:|
|Motor vehicles (TE009)||3,472||5,331||5,861||8,626||11,123||2,498||29|
|Aircraft, spacecraft, and related equipment (TE013)||5,762||6,398||8,363||12,587||13,924||1,336||10.6|
|Semiconductors and integrated circuits (EL015)||6,407||4,603||3,836||4,654||5,399||745||16|
|Medical goods (EL022)||1,650||2,039||2,518||2,675||2,953||278||10.4|
|Semiconductor manufacturing equipment (MT019A)||2,347||1,931||1,326||1,605||1,932||327||20.4|
|Electric motors, generators, and related equipment (MT023)||332||446||472||469||649||181||38.5|
|Cotton, not carded or combed (AG049)||2,061||2,553||3,411||2,183||1,106||-1,076||-49.3|
|Coal, coke, and related chemical products (EP003)||726||1,002||1,306||1,223||369||-854||-69.8|
|Petroleum products (EP005)||870||1,248||1,295||1,731||1,424||-308||-17.8|
|U.S. general imports:|
|Telecommunications equipment (EL002)||30,624||37,129||48,844||54,652||59,961||5,309||9.7|
|Consumer electronics (EL003)||21,841||17,943||18,124||17,004||17,844||840||4.9|
|Certain motor-vehicle parts (TE010)||5,493||6,623||7,558||8,325||9,709||1,384||16.6|
|Steel mill products (MM025)||1,115||1,774||1,947||1,804||2,876||1,072||59.4|
|Household appliances, including commercial applications (MT004)||8,313||8,764||9,658||10,989||11,851||861||7.8|
|Pumps for liquids (MT001)||1,217||1,551||1,851||1,846||2,248||402||21.7|
|Electrical transformers, static converters, and inductors (MT024)||3,125||3,221||3,317||3,786||4,127||341||9|
Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data.
The increase in U.S. motor vehicle exports was driven primarily by exports of passenger automobiles, in particular luxury cars.1 China has been the world's largest market for passenger automobiles since 2010, 2 and has become the largest export market for U.S. passenger vehicles.3 Personal disposable incomes and wealth have risen in China over the past few years, significantly increasing demand for luxury motor vehicles and spurring U.S. exports.4 Sport utility vehicles sales in China rose by 34 percent in the first 11 months of 2014. Sales of vehicles from luxury brands also increased; in the first 10 months of 2014, sales of Mercedes in China rose more than tenfold, while sales of BMW rose by 34 percent.5
The growth of U.S. luxury brand exports particularly affected exports from South Carolina and Alabama. South Carolina is the manufacturing center for BMW in the United States, and its passenger vehicle exports to the world are predominantly SUVs and crossover utility vehicles.6 From 2012 to 2014, South Carolina’s exports of passenger vehicles to China increased by 41 percent, from $1.7 billion to $2.4 billion.7 Similarly, as the production center for Mercedes, Alabama saw its passenger vehicle exports to China increase from $1.2 billion in 2012 to $1.8 billion in 2014.8
The second-largest sectoral increase in exports to China was in electronic products. The main contributors to this growth were semiconductors and integrated circuits (up $745 million to $5.4 billion) and electronic medical devices (up $278 million to $3.0 billion). China's increasing demand for semiconductors and integrated circuits has been driven by its assembly and manufacturing operations for electronic products.9 China still relies heavily on imports, despite efforts to promote the development of its domestic semiconductor and integrated circuit industry.10 As a result, Chinese consumption of integrated circuit products in 2014 accounted for about one-third of the global market.11 Meanwhile, China’s aging population, increasing urbanization, and rising incidence of lifestyle-related illnesses are driving consumer demand for electronic medical devices, substantially increasing Chinese imports of these products from the United States.12
The third-largest sectoral increase in exports to China was in machinery. The increase occurred mainly in exports of semiconductor manufacturing equipment (up $327 million to $1.9 billion) and electric motors, generators, and related equipment (up $181 million to $0.6 billion). Chinese demand for U.S. exports of semiconductor equipment was driven by two main factors: (1) foreign companies' upgrades/expansion of their Chinese production operations in 2013 (e.g., Samsung and SK Hynix); and (2) increased Chinese production of semiconductors and integrated circuits because of increased national and provincial monetary support of the industry.13 Growing energy demand spurred increased U.S. exports of diesel generating sets and other generating sets to China in 2014.14
The energy-related products sector recorded the largest decline in U.S. exports to China in 2014. These exports dropped by 32 percent in value to $2.1 billion, primarily because of the decrease in U.S. exports of coke and coal products and petroleum products. Coal, coke, and related products accounted for the largest decrease (declining by 70 percent during 2013–14 from $1.2 billion to $0.4 billion). One source attributed the decrease to China’s 2014 imposition of high import tariffs on coal, as higher prices from tariff imposition would discourage purchases of foreign-origin coal and coke products by Chinese consuming industries, particularly coal-fired electric utilities.15 U.S. exports of petroleum products to China declined in value by about 18 percent in 2014 to $1.4 billion, reportedly because of ongoing efforts by China to replace U.S.-produced petroleum products with ones that are domestically produced or are from members of the Organization of Petroleum Exporting Countries (OPEC) or Russia.16 Also, the price for U.S. exports of petroleum products declined by about $10 per barrel in 2014 as a result of a fall in crude petroleum prices, from about $96 per barrel in 2013 to $89 per barrel in 2014.17
U.S. exports of agricultural products also recorded a significant decline from 2013 to 2014. These exports went down in value by $761 million, primarily because of decreases in U.S. cotton exports (down $1.1 billion) and cereal exports (down $615 million). The decline in the value of U.S. cotton exports was attributed both to lower cotton prices worldwide and to a lower volume of imports by China. China imported less cotton because it had record levels of domestic stocks resulting from purchases during the last three years.18
The decline in the value of U.S. exports of cereal products in 2014 was driven mainly by very large declines in exports of corn and wheat. Corn exports declined from $989 million in 2013 to $101 million in 2014 (or 90 percent) and wheat exports declined from $1.3 billion to $176 million (or 86 percent). The decline in corn product exports was attributed to China’s 2014 ban on imports of most U.S. corn as well as of dried distillers grains with solubles (DDGS). DDGS is a byproduct of corn-based ethanol production that is commonly used as livestock feed. Both corn and DDGS showed traces of unapproved genes from genetically engineered corn. 19
The decline in wheat exports is attributable to high levels of Chinese wheat production in 2014, which reduced import demand by half from 2013. The large harvest was attributed in part to the increase in financial support China provided to wheat farmers in 2014. 20
U.S. General Imports
In 2014, U.S. imports from China increased by $26.2 billion, or 6 percent. The increase in U.S. imports from China was driven mainly by the electronic products sector. Three other sectors—machinery, minerals and metals, and transportation equipment—also recorded high import growth. Another general factor that contributed to the increase of U.S. imports from China in 2014 was the slight depreciation of the renminbi (RMB) against the dollar.21 Though this depreciation was very modest, it still contributed to the competitiveness of Chinese exports in the U.S. market.
The electronic products sector accounted for 40 percent of total U.S. imports from China in 2014, and these imports increased by $10.1 billion (6 percent), a faster rate of increase than in 2013 (3 percent). The largest increase was in telecommunications equipment (up $5.3 billion, or 10 percent), mainly because of the increase in U.S. imports of cellphones manufactured in China, particularly the iPhone 6.22
U.S. imports of consumer electronics from China also increased in 2014 (up $0.8 billion, or 4.9 percent), mainly because of elevated U.S. demand.23 The United States is the world’s largest market for consumer electronics, reaching a seven-year high during 2014.24 For its part, China has been the largest global exporter of television receivers and video monitors since 2009, accounting for over 20 percent of the world’s market.25
The second-largest sectoral increase in U.S. imports from China in 2014 was in machinery (up $3.7 billion, or 8 percent). The increase was principally because of growth in imports of household appliances (up $0.9 billion, or 8 percent), such as vacuum cleaners (up $204 million), washing machines (up $136 million), electric space heaters and soil heaters (up $131 million), and pumps for liquids (up $0.4 billion, or 21.7 percent).26
The increase in U.S. imports of household appliances from China in 2014 is part of a broader trend since 2010 of higher U.S. demand for household appliances. This rise in demand is attributed to growth in new residential construction and home improvements. Meanwhile, the production and export of home appliances—especially larger appliances—in China has generally increased over the past seven years. An important factor in this trend is that manufacturers from the United States and the Republic of Korea (South Korea), a major manufacturer of well-known brands such as LG and Samsung, have opened or expanded production facilities of home appliances—especially large appliances—to China in order to lower production costs.27
Imports of residential washing machines from South Korea and Mexico declined from $1.0 billion (representing 82 percent of U.S. total imports of residential washing machines) in 2010 to $354 million (27 percent of U.S. total imports of residential washing machines) in 2014. At the same time, imports of such products from China increased from $9 million in 2010 to $901 million (or 69 percent of U.S. total imports of residential washing machines) in 2014.28 U.S. imports of certain residential washing machines from South Korea and Mexico became subject to antidumping and countervailing duties in 2013.29
In 2014, U.S. imports from major trading partners of pumps for liquids increased substantially, including from China (22 percent increase), Canada (21 percent), Germany (12 percent), and Mexico (10 percent).30 This was attributed to increased demand from the crude petroleum and gas industries and the U.S. waste and wastewater treatment industry.31 China reportedly emerged as a large supplier because of production increases driven by China’s low cost position and increasing foreign investment.32 U.S. imports of electrical conductors and inverters also increased, mainly because of increasing demand from the U.S. telecommunications and solar industries.
The third-largest increase in sector imports from China occurred in the transportation equipment sector, driven mainly by certain motor vehicle parts (up $1.4 billion, or by 17 percent). The increase was mainly attributed to the combined effect of a 5 percent increase in 2014 in U.S. light vehicle production and the expansion of the U.S. aftermarket parts industry, which is growing because of the relatively high average age—11.4 years—of U.S. light vehicles.33
Minerals and Metals
The fourth-largest increase in sector imports from China was in minerals and metals, largely because of the increase in U.S. imports of steel mill products (up $1.1 billion, or 59 percent), particularly flat-rolled carbon (non-alloy) and alloy (other than stainless) steels products34 from China, the world’s largest steel producer. Such imports rose by $789 million (140 percent) to $1.4 billion.35 Increasing U.S. demand and increasing Chinese production together led to the significant growth in U.S. imports. An industry source indicates that some U.S. consumers of steel mill products—for example, the durable-goods manufacturing and construction sectors—boosted demand in 2014.36 Another source states that China’s exports of these products to the United States and Asia have been increasing because China has reportedly been expanding production capacity for several years.37
U.S. Trade Balances
The U.S. trade deficit with China increased by $23.9 billion (8 percent) in 2014, as U.S. total exports to China rose by $2.3 billion and U.S. general imports from China rose by $26.2 billion. The growing trade deficit mainly resulted from rising deficits with China in electronic products (up by $9.6 billion), minerals and metals (up by $4.4 billion), and machinery (up by $3.1 billion). Only three of the sectors addressed in 2014 Trade Shifts recorded a trade surplus with China in 2014: agricultural products, transportation equipment, and energy-related products. However, the trade surpluses in the energy-related products and agricultural products sectors declined in value by 43 percent and 4 percent, respectively.
1 The average unit value of U.S. exports of passenger vehicles to China is around $33,000. Motor vehicles with a cylinder capacity between 1,500 cubic centimeters (cc) and 3,000 cc (Harmonized Tariff Schedules of the United States (HTS) subheading 8703.23) and vehicles with a cylinder capacity exceeding 3,000 cc (HTS subheading 8703.24) together accounted for around 80 percent of the total value of U.S. exports of passenger vehicles to China in 2014. The average unit value of the former is $30,677 versus an average unit value of $36,638 for the latter, indicating that exports are driven in large part by high-end passenger vehicles. USITC DataWeb/USDOC (accessed March 27, 2015).
2 EIU, "Industry Report: Automotive, China," January 2015.
3 USITC, Shifts in U.S. Merchandise Trade 2013, October 2014.
4 EIU, "Industry Report: Automotive, China," January 2015.
6 BMW U.S. Factory, "Production Overview," https://www.bmwusfactory.com/manufacturing/production-overview/?r=1429887556994#production (accessed April 24, 2015).
7 GTIS, Global Trade Atlas Database (for HTS heading 8703; accessed March 27, 2015).
9 Wu, "China Will Invest 120 Bln in Integrated Circuits," April 26, 2014.
10 Song, "Integrated Circuits Industry: An Opportunity," April 16, 2014.
11 Wu, "China Will Invest 120 Bln in Integrated Circuits," April 26, 2014.
12 Torsekar, "U.S. Medical Devices and China’s Market," June 2014.
13 Dieseldorff, "Solid Years: Cautious Optimism Drives Equipment Spending," December 8, 2014. The Chinese National Semiconductor and IC Industry Investment Fund was created in 2014 under the guidance of the Chinese Ministry of Industry and Information Technology (MIIT) and the Chinese Ministry of Finance. The fund, initially valued at RMB 120 billion ($19.2 billion), is intended to support China’s domestic semiconductor and integrated circuit manufacturing industry. Government of China, MIIT, “The National IC Industry Investment Fund” (in Chinese), October 14, 2014; Perez, “Beijing Push to Spur Rapid Growth,” December 30, 2014.
14 Compiled from official statistics of the U.S. Department of Commerce for the 2010–14 period. These reflect all official revisions of previously published data up to June 2014.
15 China Energy Net, "China Re-imposes Import Tariffs on Coal Products," October 11, 2014.
16 Oilprice.com, January 28, 2015. OPEC's member countries are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
17 Data compiled from the USDOE, EIA, China Analysis, February 4, 2014; GTIS, Global Trade Atlas database (HTS heading 2710; accessed April 24, 2015).
18 Dollar Business Bureau, "India Gains USA’s Share in Cotton Exports," n.d. (accessed April 24, 2015).
19 Charles, "When China Spurns GMO Corn Imports," July 31, 2014.
20 U.S. Wheat Associates, "Comments Regarding Foreign Trade Barriers," October 28, 2014.
21 Yi Xianrong, “Will the RMB Enter a New Round?” December 12, 2014.
22 Bradshaw, "Apple Shares Touch New High," January 30, 2015; CompareCamp.com, "How and Where iPhone Is Made," September 17, 2014.
23 EIU, "Industry Report: Consumer Goods and Retail, United States," November 2014.
24 Ibid. Consumer electronics include television receivers and video monitors, amplifiers, turntables, and television camcorders, but not products such as computers, tablets, and cellphones.
25 Thompson, “Trade Data Report: Export/Import Profile,” August 18, 2012.
26 USITC DataWeb/USDOC (for commodity groups MT001 and MT004; accessed March 27, 2015).
27 IBISWorld, “Major Household Appliance Manufacturing in the U.S.,” November 2014, 24–25. USITC, Shifts in U.S. Merchandise Trade 2013, October 2014, 36–37.
28 USITC DataWeb/USDOC (for HTS subheading 8450.20.0090; accessed March 27, 2015).
29 USITC, Certain Large Residential Washers from Korea and Mexico, investigation nos. 701-TA-488 and 731-TA-1199-1200, February 2013, 1.
30 USITC DataWeb/USDOC (for commodity group MT001; accessed March 27, 2015).
31 Freedonia, “World Demand for Pumps to Approach $84 Billion,” February 2, 2015.
33 German American Chamber of Commerce, "The Automotive Industry Is Booming Again" (accessed March 27, 2015); IHTS, “Average Age of Vehicles on the Road,” June 9, 2014.
34 Also known as plates, sheets, and strips.
35 China produced nearly 823 million metric tons (mt) of raw steel in 2014 (just over one-half of the 1.6 billion mt produced worldwide). WSA, “Monthly Crude Steel Production 2014,” January 22, 2015; WSA, “Monthly Crude Steel Production 2013,” January 22, 2015.
36 Zacks Equity Research, “Steel Industry Stock Outlook—Feb. 2015,” February 3, 2015.
37 Sanderson and Donnan, “China Steel Exports Disrupt Markets,” October 21, 2014.