2005-11-19

China is the source of US trade deficit? and other myths

The Economist plotted US merchandise trade deficit for the past 10 years, and concluded China represents only 1/4 of the sum today, sort of commensurate to its share of world labor outside US, and quite contrary to what we have heard all these days from the media (and WSJ op-ed).

If you count non-merchandise trade (service, license fees, etc), China is running a deficit against US so the figure is even smaller.

The Economist also shows some interest tidbits
  • "According to a recent Harris Poll, four in ten people believe that China will be stronger than America within a decade. More than half are concerned about China becoming militarily stronger within that same period; and the same proportion reckon China will have a negative effect on the future of America's economy."

I suppose we can use GDP and military spending as the proxy for comparison

  • In 2004
  • In 10 years, assuming GDP growth for China is 8% and US 4% (chances are that 8% is way too optimistic), population growth 1% for both
    • GDP: $3.56tn vs $17.39 tn; GDP/cap: $2,462 vs $53,194
    • Even if we use the dubious PPP to measure (assuming prices of food and houses remain at current relative level, compared with the US), China's GDP will only be at $15.56tn and $10,832/cap
    • Assuming defense budget/GDP ratios do not change (1.45%-2.3% for China and 3.4% for USA), in 2014 it would be $52-82bn for China and $591bn for USA (PPP does not make sense here according RAND/etc, since a lot of the spending is to purchase arms using hard currency)

The media has now trained us to do our own homework and research.

8 comments:

dylan said...

Good on you for pointing out the myths. Time, Newsweek et al have plenty to answer for in their constant stories puffing up China as the next big thing - "Shanghai City of the Future" and so on. It is they who have helped create the misguided perceptions in the Harris Poll.

Michael Turton said...

ROFL. China more powerful than the US in ten years? ROFL. Well, maybe -- if the US has an Argentine-style meltdown. When are you giving us your predictions on future Chinese growth?

Sun Bin said...

well, that is how far the China threat theorists and your defense contractors are willing to go. :)

...and there are many believers. from 30-50% of your people believe that, according to different surveys.

denk said...

Whenever the mice, (military industrial congressional complex) wants more money for another mega weapons system, they need a bogeyman, now that ussr is gone, they would make china look “ten feet tall”, ;-)
“"They want China to be 10 feet tall,":http://www.fas.org/sgp/news/2001/07/usn072301.html
" complains one analyst familiar with the project. "They're cooking the books." (lol, does it ring a bell?)

sun bin, have you noticed that lately this Chinese spies mania thingy is very much alive……
since china is not attacking another body like the usa does, its hard to portray it to be the new evil empire despite uncle sham’s best effort, so the next best thing to scare the “sheeps” is to make it look like there is a commie spy under every pillow….

Sun Bin said...

It seems people are more cautious this time (learned from the Lee Wenho fiasco). Many acknowledge that 'every country spies', when you are caught you are doing a bad job, that is all.

There have also been a lot of discussion (in the west) discrediting the fictitious claim that there are 3000 spying companies :).
So people are getting more realistic.

denk said...

“sun bin said,”
The Economist plotted US merchandise trade deficit for the past 10 years, and concluded China represents only 1/4 of the sum today, sort of commensurate to its share of world labor outside US, and quite contrary to what we have heard all these days from the media (and WSJ op-ed).

One thing common about the wsj, feer and the econmist, all are trade magazines with a heavy dose of politics. Nothing wrong with that except the war street journal and feer are unabashedly biased against china, their political op eds are all about Tibet, falun gong, Taiwan, “Chinese aggression” , “Chinese abuse of humanright” yada yada, -- when was the last time do you find these mag talk about humanrights in Kashmir, assam, nagaland for example? I bet ninety nine point nine per cent of yanks don’t have a clue where is assam and nagaland – but even a five year old “knows” there is “ongoing [sic] genocide in Tibet”
The American free press has done a really wonderful job on the yanks, the ccp should send some of its propaganda people to the land of (dis)information to learn from the master. ;-)

Anonymous said...

The source of these myths are coming daily from the patriotic Lou Dobbs in CNN. Every weekday, he will dedicate at least 15 minutes to bash China with different exaggerated stories and manipulatable polls of RED CHINA THREAT, ( and the bastard also bashes Mexico to a smaller extent.)

Anonymous said...

Actually, you really think the Chinese report they're true defense spending. Not even close. You are comparing apples to oranges. They don't declare RD or Procurement accurately as a matter of national security.