Diminishing leverage by mattsteinglass
April 19, 2007, 9:01 am
Filed under: China, Trade, United States

Missed this yesterday, but the NY Times’s Keith Bradsher has a good piece on the gradually decreasing importance of trade with the US to China’s economy. From the Canton Trade Fair in Guangzhou, Bradsher reports that “the American market is not as crucial as it used to be. Instead, Chinese producers of everything from socket wrenches to sport utility vehicles say, their fastest growth these days lies in Europe, Africa, the Middle East, South America and elsewhere in Asia — in other words, practically anywhere other than the United States.” Exports to the US are still extremely significant, but they’re not the single most important element in China’s economy any more; the EU surpassed the US last year as an export destination for Chinese products, due in large measure to the rise of the Euro and the fall of the dollar.

So, if there was ever a period where the US might have used its immense importance as a buyer of Chinese exports to leverage foreign-policy goals (on human rights, Taiwan, Darfur, etc.), that moment is rapidly passing. Of course, it’s never been productive to take a directly confrontational, “set these dissidents free or we’ll put tariffs on your furniture” approach. Rather, the best approach has always been “the US values its relationship with China, an increasingly powerful player on the world stage, but oppression of dissidents makes that relationship difficult and makes it harder to keep Congress from passing protectionist trade measures”. But still, ultimately, the weight behind the latter approach comes from the US’s tremendous importance as an export destination for Chinese products. As China’s economy becomes more balanced, the US’s influence shrinks.


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