I was watching a US TV anchor claim that the US is the No 1 market for Chinese products (as part of an argumentation he was making that "China needs the US", he even went on to suggest that it is the US that is doing China a favor by allowing it to "park" 1.2 trillion of its 3.2 trillion Foreign currency reserves in US T-bills!!!)
Is it, I wondered!
According to the European Commission's Trade pages, EU goods imports from China 2010: €281.9 billion (+31% on 2009). Add to that: EU services imports from China 2009: €13 billion.
According to the US Census Bureau, US good imports from China in 2010 were: USD 364.944 billion. As per imports of Services, according to the Office of the US Trade Representative U.S. imports of private commercial services* (i.e., excluding military and government) were $8.2 billion in 2009 (latest data available).
So 294.9 (EU) vs 373.1 (US)! The guy was right.
But wait! The EU imports are denominated in Euros. The US in USD!
Let's see what happens when we apply different USD/Euro rates to these 2 numbers:
1 Euro = 1.2 USD > The EU imports rise to 353.9 USD (20 billion less than the US ones)
1 Euro = 1.3 USD > The EU imports rise to 383.4 USD (8 billion less than the US ones)
1 Euro = 1.4 USD > The EU imports rise to 412.9 USD (30 billion more than the US ones)
The parity rate (at which the US and EU imports from China are of the same value, in 2010), 1.2652 USD per Euro!
Should we not make those calculations based on Yuan? Well, it depends. Among other things, on what happens to the revenue from exports. Does it get converted to Yuan and used in the Chinese economy or is it kept in the currency the contract was made and invested? Plus, are contracts for Chinese exports to the EU, are they usually made in Euros or in USD? In Yuan? Doubt it!
So is there an answer? Is the US or the EU the biggest market for China's exports?
Let's find a stat for the average USD/Euro rate for 2010:
According to the US IRS, it was 0.755 Euros per USD ie 1/0.755 USD per Euro = 1.3245!
Using that rate then: EU imports from China were 294.9 billion Euros times 1.3245 = 390.60 USD which is 17 billion more than the US imports from China., USD 373.1 billion (2010 stats, 2009 for US Services imports).
Thus the EU is a bigger market (2010) for China's exports (goods and services) than the US. And of course the biggest in the world.
But then again, the EU is not a country or a single economy (at least not yet). So, I now have an EU headache.
PS. So, EU, make up your mind. Are you a free trade area or a country?
To be continued (maybe; but surely at your local market)
PS2. Of course, only EU imports to the Eurozone were directly, at best in Euros. For the 10 other non-Eurozone members, they were probably denominated (the contracts thus the payments to China) in Pounds, Swedish Kronas, etc. But the European Commission lists them all in Euros. Thankfully, imagine if I had to convert 10 import data into Euros!)