According to a report by the Manufacturers Alliance for Productivity and Innovation Foundation, exports from the USA to 13 Asian nations increased by 37% in the years 2009-2013, while exports to the rest of the world grew by 52%.
The US exports pivot away from Asian markets report, written by Ernest Preeg (a senior advisor for international trade and finance), found that Chinese exports to these Asian markets over the same period grew by 85%, more than twice as fast as US exports. By 2013, Chinese exports to the 13 Asian nations were $707 billion, compared to $259 billion for US exports.
Mr Preeg said: “Chinese exports to Japan, South Korea and India were about two-and-a-half-times larger than US exports; to Malaysia and Indonesia they were at least four-times larger — and to Vietnam 10-times larger.”
The report also says that US trade deficits with the 13 markets are growing rapidly. From 2009 to 2013, deficits with the Asian countries grew from a total of $98.3 billion to $160 billion.
Mr Preeg added: “US exports to China have been growing, but the nation is not closing its trade gap. In 2013, US exports to China were $122 billion, but imports were $440 billion. The progressive loss of US export competitiveness across the Pacific centres on the technology-intensive manufacturing sector, and is the result of radically different trade strategies by Asians compared with the US.
The majority of these nations are pursuing export-oriented growth that is centred on the manufacturing sector and achieving an ever-larger trade surplus. By contrast, US economic strategy has focused far more on domestic objectives, often with adverse impact on export competitiveness for manufactures.”
Mr Preeg also warned that greater attention must be paid to currency manipulation. Saying it was “the ultimate mercantilist policy instrument,” he pointed out that if “China manipulates its currency 30% below its market level, the result is an across-the-board 30% surcharge on imports and a 30% subsidy for all of its exports.
“IMF Article IV bars currency manipulation, which it defines as ‘protracted, large-scale official purchases of foreign exchange’, which have the direct and immediate effect of lowering the currency.”
Mr Preeg said that the IMF Article is “a travesty rather than a meaningful anti-mercantilist obligation. Other Asian nations have pegged their currencies to China’s currency, becoming manipulators in turn.
“The US response to this unprecedented scope of currency manipulation in violation of IMF obligations has been total denial.
Twice each year, the Secretary of the Treasury is required to report to the Senate Banking Committee on currency manipulation and, for years, he has stated that no nation, including China, has been manipulating its currency in violation of its IMF obligations.”