What Can Be Done About The Big U.S. Trade Deficit With China?

Here?s an encouraging figure from last year about the imbalanced U.S.-China economic relationship: American exports increased to a record $110 billion, a gain of 6.2% from 2011. ?The wide range of U.S. companies that doing business to China include Boeing Boeing and Harley-Davidson Harley-Davidson.????

The trouble?was on the import side. ?Even though exports increased, the overall U.S. trade deficit with China expanded to $315 billion because of ?imports grew ?by a higher 6.6%, to $425 billion, or almost four times as much as the U.S. sells. ?That big drain tends to slow?U.S. economic growth at a time when our government debt is huge and unemployment is high.

One way to ease the U.S.-China gap without turning to protectionism would be to increase exports to China.?? Personally, I?m not a fan at all of President Obama?s big-government economic policies. Yet he has worthily used his office to call attention to the importance of exports and challenged American companies to double overseas sales?during the five years?ending in December?2014?as part of a National Export Initiative. I had to the chance in Shanghai last week to talk to a?top U.S. official leading that charge about how China fits in

Meeting with Forbes and two local journalists, Michael Masserman ? the executive director of export policy, promotion and strategy at the U.S. Department of Commerce ? said a key to improving U.S. exports to China is finding ways for small and medium sized companies, or SMEs, to better succeed. ?Globally, SMEs account for about 34% of U.S. exports, an increase from 27% in the early part of the last decade. China, he noted, has become the No. 3 market in the world for U.S. SMEs, after Canada and Mexico.? ?Small and medium-sized business are learning how to navigate the China market,? Masserman said, expressing confidence about opportunities here.

What holds back U.S. SMEs from exporting in general is uncertainty about the business outlook and financing, he said. Also, many don?t cast a wide net when it comes to finding overseas customers, exporting to only one market. And in China specifically, American SMEs face challenges from trying to compete with Chinese government-owned companies, and keeping track of regulatory hurdles, he said. ?

Masserman, who previously practiced corporate law, encouraged small U.S. businesses to look into government services that might help with marketing and distribution information, and other areas. One place might be a U.S. government website export.gov.??(Here?s a link to?a?profile called ?Export to China on the Cheap? that I wrote last year about Frank Lavin, a former senior U.S. Commerce Department official who has set up his own business and is looking to help U.S. small companies export more.)

Masserman also suggested that U.S. cities should get more involved in promoting exports. One doing just that in Shanghai last week was Houston.? The No. 1 exporter among U.S. cities had a trade promotion group in Shanghai and Beijing last week that included executive vice mayor Andy Ichen.? Investment and trade flows between the two are expected to get a lift from a new Air China direct flight that started on July 11.? Chinese companies with subsidiaries in Houston include Sinopec, Cnooc Cnooc and Baosteel America. Two-way trade between China and the city was?$12.9 billion in 2012.

Yet Houston is also representative of the larger imbalance that the U.S. faces with China: its exports totaled $3.8 billion last year, while imports were a much bigger $9.1 billion. A tip of the hat to all?trying?to find sensible ways to do better. ?

? Follow me on Twitter @rflannerychina

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Source: http://www.forbes.com/sites/russellflannery/2013/08/03/what-can-be-done-about-the-big-u-s-trade-deficit-with-china/?utm_source=allactivity&utm_medium=rss&utm_campaign=20130803

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