US policies blamed for large drop in trade with China

The Trump administration is doing great damage to US-China trade relations due to ill-advised trade policies, according to an American expert in international business.

John Graham, a professor emeritus at the Merage School of Business at the University California, Irvine, warned of "dire" signals in his recent study, "US-China 2020 Barometer", which was co-authored by Ben Leffel, a lecturer in sociology at the University of California, Merced.

Overall US-China trade — exports between the two countries — fell at double-digit rates in 2019, according to the study, which provides a multidimensional representation of the trade relationship based on a compilation of pertinent data.

The study attributes the substantial recent decline in trade mostly to political frictions between the two countries.

Graham said the Trump administration was poorly advised by his former Merage School colleague Peter Navarro.

"What Trump and Navarro don't comprehend is that international trade produces both prosperity and peace globally," he said. "Hopefully the voters of the United States will choose a new president, one that won't scapegoat other countries for our own economic problems."

In response to the Trump administration's blaming China for job losses, Graham said that the actual "culprits" are decision-makers on Capitol Hill, Wall Street and in corporate boardrooms.

It was the executives of US companies that decided to close American factories, he said, adding that tariffs don't "curb the greed" that sends jobs to China.

Graham said in his study that it's important to consider that the trade deficit is overstated in two respects: First, the US has a trade surplus with China in services, as it does with the rest of the world. Secondly, many of the products sent to the US are simply assembled in China. For example, only 3.6 percent of the value of an Apple iPhone 7 shipped to the US is from Chinese components and labor.

He also criticized the Trump administration for being distracted by "China conundrums of their own creation", only to miss the real and known threat of COVID-19.

"The response to COVID-19 was well managed in China and poorly so in the US," said Graham. "Of course, there are many reasons for this drastic difference. ... But the US response to the disease is clearly among the least effective in the world."

Despite the "disappointment" in the latest data, Graham pointed out positive markers and a strengthening bilateral relationship in many respects in his latest report.

The average income of citizens in both countries continued its steady increase in 2019; joint US patent awards to invention teams including both US and Chinese citizens have resumed their healthy growth and now total 18,210 in this century; intellectual piracy rates also continued their downward trend in both countries, according to the study.

While the novel coronavirus pandemic has crushed international trade worldwide, US exports of goods to China remained resilient, actually increasing 8 percent during the second quarter of 2020, compared with the same period in 2019, the study shows. In contrast, American exports of goods to the rest of the world fell 26 percent over the same period.