US Versus China Hidden Export Advantages and Trade Opportunities

Apr 14, 2010
Daniel Workman

Aluminum Waste and Scrap Trade Opportunities - tandemracer (Flickr)

These top 10 U.S. exports to China led a group of 4,180 American products that generated individual trade surpluses versus Chinese imports in 2009.

According to Census Bureau statistics, the U.S. trade deficit with China was US$226.8 billion for 2009.

That figure represents a 15.4% improvement over America’s $268 billion trade deficit with the People’s Republic in 2008.

Too often, analysts fixate on the overall U.S. trade deficit numbers as proof of Chinese superiority versus America in international trade.

US Trade Surplus with China by Product

More detailed statistics from the United States International Trade Commission show that sales for U.S. exports to China outpaced comparable Chinese imports in 4,180 different product categories.

Therefore, the U.S. posted individual trade surpluses with China in 4,180 export classifications during 2009. When a country’s exports exceed imports exchanged with another nation, that country has established a competitive trade advantage over its partner.

Below are the top 10 U.S. exports to China where America has the greatest competitive trade advantages over China.

Top 10 U.S. Versus China Export Advantages

The U.S. is the world’s leading producer of soybeans (also spelled soya beans), while China consumes more soybeans than any other country. Those 2 simple facts give American exporters a powerful competitive advantage in supplying an essential food commodity to over 1.3 billion Chinese consumers.

American excellence in aerospace technology resulted in a $5.3 billion export advantage in the trade of aircraft and spacecraft with China last year.

U.S. manufacturers also held a compelling $3 billion hidden export advantage in shipping the so-called brains of a computer (electronic processors and controllers) to China.

Listed below are the top 10 U.S. exports to China that generate the greatest trade surpluses. For each export product category, the corresponding harmonized tariff system code is shown within brackets.

Soybeans (code 120100) … US$9.2 billion trade surplus (up 26.5% from 2008)
Aircraft and spacecraft including parts (880000) … $5.3 billion (up 4.5%)
Computer processors and controllers (854231) … $3 billion (down 10.5%)
Iron waste and scrap (720449) … $1.5 billion (up 99.6%)
Copper waste and scrap (740400) … $1.35 billion (down 26.3%)
Aluminum waste and scrap (760200) … $1.26 billion (down 27.3%)
Raw cotton (520100) … $826.2 million (down 49.4%)
Frozen chicken meat (020714) … $648.2 million (down 4%)
Non-stainless alloy steel waste and scrap (720429) … $617.6 million (down 13.1%)
Polyethylene (390120) … $569.7 million (up 127.7%).

American exporters also have billion-dollar competitive advantages in supplying waste and scrap metals to Chinese plants that recycle iron, steel, copper and aluminum into high-quality new metals.

Despite the fact that China produces more raw cotton than America, the U.S. incurred a trade surplus by exporting $826.2 million more in raw cotton to Chinese textile makers than imports of that same commodity from China.

The U.S. also had significant export surpluses versus China in frozen chicken products and polyethylene. The latter is used to make many consumer goods including films, insulation, containers and other plastic products.

Fastest-Growing U.S. Versus China Export Advantages

Four of the top 10 U.S. exports to China above generated greater trade surpluses than in 2008.

In first place, U.S. net exports of polyethylene created a 127.7% annual gain in America’s trade surplus for that export category.

In second place, America’s trade surplus from iron waste and scrap exports to China almost doubled last year. This is a formidable success, given that 2009 marked the severest global economic slowdown since the Great Depression.

American soybeans exported to China resulted in a trade surplus better by more than a quarter than the positive net exports a year earlier.

Up 4.5%, aircraft and spacecraft exports from the U.S. to China experienced the smallest growth in trade surplus among the top 10 product categories. America’s aircraft and spacecraft trade with China is relatively new and politically sensitive, yet holds great promise for future growth.

U.S. Export Trade Opportunities in China

Below are specific examples of trade opportunities in export categories where the U.S. has significant competitive advantages over Chinese imports.

U.S. companies can design more environment-friendly products to be made from the American polyethylene shipped to Chinese manufacturers. For example, American entrepreneurs might engineer a durable shopper’s backpack made from polyethylene that replaces plastic shopping bags that end up in landfill sites after only one use.

Similarly, American companies can develop joint ventures in China to make more products from recycled American scrap iron, steel, copper and aluminum. New electric cars and hybrid vehicles could be made exclusively from recycled metal scraps and waste. Of all these metals, aluminum requires a much lower temperature to recycle compared with processing new aluminum. According to Wasteonline, energy saved by recycling one aluminum can saves enough energy to run a television for 3 hours.

According to Encyclopedia Britannica Online, 98% of the U.S. soybean crop is used for livestock feed. Soybeans have many other uses, from soy milk to soy imitation meat vegetarian foods. Given the U.S. competitive advantage in exporting frozen chicken meat to China, American entrepreneurs are well-positioned to develop frozen soy-based tofu products and vegetarian foods for sale in the huge Chinese market.

The key to optimizing the US trade surplus with China by product is simple. American entrepreneurs should focus on building Chinese sales for finished products made from U.S.-exported resources where America already has established competitive advantages versus China.