Back to search results | New search | View the full volume

How BIG is the China problem?

Written by Bruce Braker, Tooling & Manufacturing Association, 1177 S. Dee Rd., Park Ridge, IL 60068, 847-825-1120, bbraker@tmanet.com, www.tmanet.com

What is our greatest concern? China or the recession? The recession is the greater problem, even though China gets most the press. China is a threat, but put that threat in correct perspective. China has contributed to the manufacturing recession, but they didn't cause it. Over capacity and reduced demand caused it. Chinese competition has hurt some U.S. small to medium size manufacturers, but China has not and will not destroy U.S. manufacturing.

We have to recognize what the statistics show if we are going to send a credible message to Washington. Overstatement undermines credibility and subtracts from the message. Anecdotal evidence must be delivered in the context of reality. Yes, manufacturing in the U.S. is in crisis, but let's keep the causes in correct perspective so we can best determine the remedies that will improve the outlook for manufacturers in the U.S.

The brutal manufacturing statistics regarding China

1. U.S. imports of goods from China in 2002 were $125 billion.
2. U.S. exports of goods to China in 2002 were only $22 billion.
3. U.S. trade gap in manufactured goods with China was $103 billion in 2002.
4. China's exports of goods to the U.S. surged 22.3% in 2002.
5. China accounted for 21.2% of the U.S.'s manufactured goods trade deficit of $484.3 billion in 2002.

The manufacturing facts in perspective

Overall manufacturing statistics

1. In 2001 U.S. value of manufacturing shipments was $4.0 trillion.
2. In 2001 China accounted for 9.0% of U.S. goods imports growing to 10.8% in 2002. (Canada was first at 18.2%).
3. In 2001 China accounted for 2.4% of manufacturing market share in the U.S.
4. Approximately 10% of foreign investment in China is U.S.
5. About a third of China's $326 billion in exports went to the U.S. in 2002.

The mold industry statistics

1. In 2001 U.S. value of mold shipments was $5,224,354,000 (not counting molds made in captive U.S. shops for internal use).
2. In 2001 mold imports were valued at $1,160,624,871.
3. In 2001 China accounted for 2.09% of mold imports. Their market share increased to 2.23% of imported molds in 2002. In 2002 over half (51.83%) came from Canada.
4. In 2001 China accounted for 0.38% (38 one-hundredth of one percent) of molds used or produced in the U.S.

The bold copy below has been seen in letters to Washington. TMA commentary clarifies the facts.

Myth: Almost every large American manufacturer has moved its factories to Communist China.

Let's look at some United States 2001 manufacturing statistics. These totals are for a manufacturing recession year. Pre-recession shipments in 2000 were $4.2 trillion.

United States 2001 Manufacturing Statistics

Total number of employees:   15,879,477
Payroll   $593,050,590,000
Production workers   11,235,111
Wages   $342,990,489,000
Value added:   $1,853,929,431,000
Total cost of materials:   $2,104,865,642,000
Total value of shipments   $3,970,499,812,000

We still produce $4.0 trillion worth of manufactured goods in the U.S. We have more than a few factories left here.

Myth: Nearly everything we use in our daily lives has "Made in China" on the package.

Countries of origin - China is third

China is in third place accounting for 10.8% of imports. Canada accounts for 18.2%. So 10.8% is not quite "nearly everything" yet. China's share of imports has grown since 1997, but is still well behind Canada's 18.2%.

China's share of U.S. imports has grown to 10.8%

Let's take one more step to further put China's market share in perspective. United States manufacturing value of shipments in 2001 was $3,970,499,812,000. Total imports from all countries in 2001 were $1,132,635,339,930 in 2001. Add those two together for a total of $5,103,135,151,930. Chinese manufacturing market share in the U.S. is 2.4%, considerably short of "nearly everything."

China 2001 market share of total manufactured product

Myth: China exports all of these products to the U.S.....

According to an article in the February 22, 2003 Taipei Times in 2002 about a third of China's $326 billion in exports went to the U.S.

Hard to quantify: . . . and our country's biggest exports to Communist China are our American manufacturing jobs and technology.

We only shipped them $22 billion in 2002. We'll have to ship more past that Great Wall. Technology flows worldwide. Trading technology for market access may hurt in long run. In the meantime multinationals from Taiwan, Japan, Hong Kong, Germany, UK, US, and elsewhere will continue to build plants in China to access Chinese market and for export. Strengthening of Chinese currency, the RMB, would help.

Myth: Our government doesn't know what's going on.

They know. They're just not effectively addressing the issues yet.

The following is from the February 22, 2000 Taipei Times:

"The US' record trade deficit with China last year may increase pressure on Beijing to meet its market-opening pledges and let its currency strengthen, government officials and analysts said.

"The US trade gap with China widened by about a quarter last year to US$103 billion, the biggest ever with any country, as companies such as Motorola Inc took advantage of the country's low manufacturing costs to sell more China-made goods to American consumers.

"China's exports to the US last year surged 22 percent.

"At the same time, some US exporters say China, the country's No. 4 trade partner, hasn't given them the market access it promised when it joined the WTO in December 2001.

"This week, US Trade Representative Robert Zoellick delivered that message at several meetings in Beijing.

"'China is selling a lot to the United States,' Zoellick said, after urging Chinese officials to remove barriers to US farm goods. 'It's good for our consumers, it is good for their growth, but it does mean that we have to have a fair shot at selling products here,' he said.

"The growing deficit is fueling complaints from the US Congress and business groups that China is dragging its feet in opening its markets, Zoellick said.

"China has also drawn charges from Japan, its biggest trade partner, that it's keeping its currency artificially weak to undercut other countries' exports.

"The Chinese yuan, pegged at about 8.3 yuan to the US dollar since 1995, has weakened against the yen and other currencies in the past year as the dollar's value fell.

"Japanese Finance Minister Masajuro Shiokawa said earlier this week he may argue at today's meeting of the G7 industrialized nations in Paris that China should revalue the yuan.

"'The worse the US deficit gets, the more fuel it will provide for people who want China to adjust its exchange rate,' said Michael Kurtz, an economist at Bear Stearns Asia Ltd in Hong Kong.

"The US, responding to farmers' complaints, is considering taking its case against China to the WTO, Secretary of Agriculture Ann Veneman said last month.

"If successful, the move would allow the US to impose sanctions on China."