Making good use of trade

Trade volume between China and the US hit $441.6 billion in the first three quarters of the year, surpassing the $438.1 billion in trade between Canada and the US. [Photo/IC]

At a moment when the United States is strongly pushing the Trans-Pacific Partnership free-trade deal as a foundation for "21st century trade", that the US' politically sensitive trade gap with China widened to $36.3 billion, as imports hit a record $45.7 billion in September, will likely further stoke the US' specious argument that China should not write the trade rules for 21st century.

However, for those who are true believers of free trade, the US Commerce Department data actually provides more cause for optimism than meets the eye.

The latest data show China is set to become the biggest trading partner of the US this year, eclipsing Canada for the first time, as low prices have slashed the value of the US' energy exports to its neighbor.

The symbolic importance of such strengthened trade relations between the world's two largest economies is obvious.

On the one hand, stronger trade between China and the US will give a huge and much-needed boost to global trade, a long-term growth engine.

On the other hand, closer trade relations will make the world's two largest economies more interdependent and enable them to avoid unnecessary trade frictions.

Yet the really encouraging news is the current size of their bilateral trade represents a milestone rather than a peak, because Chinese consumers are just beginning to demonstrate their growing appetite for imports.

The online Singles' Day sales on Wednesday, China's rival to the US' Black Friday and Cyber Monday, will highlight the potential of Chinese consumers' purchasing power for quality products from the US and other countries.

As the online shopping holiday will show, it is not about who writes the rules of trade. It is about who can make most use of trade to sell as much as possible of what they are best at producing.