The Strategist

China deals a blow to US economy

02/28/2022 - 09:15

According to Reuters, the US trade imbalance for 2021 increased by 27% to $859.1 billion, a new high.

USDA Photo by Lance Cheung
USDA Photo by Lance Cheung
The previous high was $676.7 billion, reached in 2020. The balance sheet deficit was $80.7 billion at the end of December, up 1.8 percent from November.

Experts attribute the surge to increased consumer goods imports. At the same time, November's figures were downgraded from $80.2 billion to $79.3 billion. Economists polled by Reuters expected a $83 billion deficit.

External factors also influenced the annual balance sheet deficit result. In 2021, the United States overtook China as the world leader in imports from the PRC, and the trade deficit would have been significantly reduced if China had completely implemented the conditions of the 2020 agreement and increased imports of US goods. The accord brought an end to a nearly three-year trade war between the United States and China.

China's retaliation proved to be devastating. According to Chad Bown, a senior scholar at the Peterson Institute for International Economics, China had only met 60% of its promises by November 2021. Officials from the United States are putting pressure on China and blaming Beijing for the deal's breakdown. Even partial fulfillment, however, has resulted in a 36.9% increase in US products exports to China. Goods shipments from the PRC to the United States climbed by only 28.3 percent.