NEW DELHI: Americans anxious about how much of what they consume is 'Made in China' can stop fretting. A new study by the US Federal Reserve Bank of San Francisco shows that only $2.7 of every $100 worth of US consumption is 'Made in China'.
That should soothe fears about America's burgeoning trade deficit with the Asian giant. Last year, America's imports were $273 billion more than what it exported to China and if the first six months of this year are any indication, the trade gap could widen by as much as 12%.
Stores across the US seem to highlight this trend, with clothes, toys and gadgets all bearing the ubiquitous 'Made in China' tag. No wonder that lobbies like the Alliance for American Manufacturing want penalties to be slapped on China for unfair trade, and Congressmen want a vote on whether an undervalued yuan should be treated as an export subsidy. But the evidence from shop shelves might be misleading. Economists Galina Hale and Bart Hobijn find that made in China accounted for less than 3% of what Americans consumed, with goods made elsewhere in the world accounting for another 8% or so. This implies that 88.5% of what US consumers spent on, went right back into the pockets of American manufacturers and service providers.
Indeed, US trade numbers tend to exaggerate the outflows from the US to China.
The most famous example, of course, is that of the iPhone, which goes for about $180 in the wholesale market, of which China's share - as the final assembler of components sourced from all over the world - is a mere $6.50.
But trade numbers lump the entire cost of the iPhone to China, artificially boosting the dollar value of the US trade deficit with China. However, China's share of the US market has crept up over the last decade. Hale and Hobijn also find between 2000 and 2010, the amount of imported stuff consumed by Americans has stayed stable at 12-14%, while China's share has increased from a little less than 1% to a little less than 2% in the same time. Clothes and shoes are the most ubiquitous Chinese imports into America, followed by furniture, household goods and other durables. Will these findings help douse America's growing Sinophobia? It might be too early to take that call, but now the bogey of China swamping the US economy can be put down with some hard, and surprising, numbers.
