2011 report to congress - U.S.-China Economic and Security Review ...

23Figure 1:China’s Share of the U.S. Global Trade Deficit (by percentage),2000–2010Source: U.S. Bureau of the Census, U.S. Trade in Goods and Services (Washington, DC: U.S.Department of Commerce, August 15, 2011).These data suggest that the growth in the U.S. global trade deficitreflects growth in the U.S. trade deficit with China and thatother emerging economies are being replaced by China as a finalsupplier of finished exports to the United States. Indeed, numerousinternational trade scholars have asserted a causal link betweenincreases in China’s trade surplus with the United States and decreasesin the bilateral balance of trade of other nations of Southand South East Asia with the United States. 5The more significant trend, however, is not the magnitude of theU.S. trade deficit with China but the composition of goods. Overthe last ten years, Chinese manufacturing has undergone a dramaticrestructuring away from labor-intensive goods toward investment-intensivegoods. Production is driven increasingly less by lowcostlabor and increasingly more by low-cost capital, which is usedto build next-generation manufacturing facilities and to produceadvanced technology products for export. This can be seen mostclearly by examining Chinese exports of labor-intensive products,such as clothing and footwear, as a percentage of total exports. In2000, exports of labor-intensive products constituted 37 percent ofall Chinese exports. By 2010, this percentage fell by more than halfhad fallen to just 14 percent (see table 2, below).dkrause on DSKHT7XVN1PROD with $$_JOBVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00035 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464Ch1Fig1.eps