Vietnam and Canada gain from US-China trade reorganization, South Korea's consecutive trade deficit
Reworked trade rules between the US and China led to China relocating factories to Vietnam and Mexico as an investment, and the US increased the share of low-cost imports from these countries, which contributed to inflation in the US, he said.
Regarding Korea's consecutive trade deficit, Reuters, which predicted a trade deficit in August exports as well, predicted in an economist survey that the economic recovery in China, Korea's top export market, will continue to be slow and spread to Europe, leading to a continuous trade deficit in Korean exports for the 30th.
As a result of a study by UC San Diego University and World Bank economists who analyzed the results of Republican Trump's 'punitive tariffs' and Biden Democrats' 'technical restrictions' control policies, “the reworked trade rules, along with other economic changes, are expected to be effective in countries such as Vietnam and Mexico. The New York Times reported on the 29th that China's share of US imports has decreased as its share of imports from other low-cost countries has increased.
Laura Alfaro (UC San Diego) and Davin Chor (Tuck School of Business) Comtrade 'Analysis of data on the share of US imports in each region between 2017 and 2022' found that China was -4.8% to Japan (-1.5%) and Germany. (-0.5%), etc., while increases were evident in Vietnam (2.0%), Taiwan (1.0%), and India (0.6%).
Countries with an increase include Canada (0.5%), Mexico (0.5%), Israel (0.4%), a country close to the U.S. for trade in the past, and Israel (0.4%), Korea (0.5%), and Switzerland (0.3%).
"While global trade patterns have been reshaped, U.S. supply chains remain heavily dependent on, if not direct, Chinese production," a new study discussed Thursday at the Kansas City Federal Reserve's annual meeting in Jackson Hole found.
Harvard Business School economist Laura Alfaro and Dartmouth Tuck School of Business professor Davin Chor wrote in their paper, “China’s share of U.S. imports peaked at about 22% in 2017. After taking , it fell to 17% in 2022.”
Commenting on the findings, the NYT said, "places like Vietnam have entrenched themselves in supplying more clothing and textiles to the United States, while neighboring countries like Mexico have begun sending more auto parts, glass, iron and steel." revealed.
The study found that a 9 percentage point drop in the share of imports from China could increase import prices in Vietnam by 8.3 per cent and import prices in Mexico by 2 per cent, the effect of which would contribute weakly to consumer inflation.
“One question currently posed by economists is that innovation in the US manufacturing sector, which is the economic benefit of relocating factories to the United States or other friendly countries, ultimately has a strategic cost, such as a higher price paid by consumers,” Alfarro said. whether it will be greater than or not,” he told the NYT.
"I believe the cost of reshoring is 'really not taken into account' by the government and others," World Bank researcher Freund told the NYT.
"We're going to put everything back and we're going to have all these jobs and it's going to be very costly to actually do that, driven by the typical repeated explanation that everything is going to be hunky dory," he said. "One of the reasons inflation has been low in the past is “This is because globalization has introduced low-cost products and improved productivity,” he said, linking the current high inflation to the reorganization of U.S. trade.
Regarding Korea's continued trade deficit, Reuters said on the 30th, "Pessimism surrounding the Chinese economy is growing, and demand is showing weakness in other regions as well."
Korea's trade deficit widened in the first 20 days of this month, with exports to the US and EU falling 7.2% and 7.1%, respectively, following a 16.5% decline in exports from the previous year to a 27.5% decline in China.
“We do not expect to see clear signs of an export recovery in the August trade data yet,” said Oh Seok-tae, an analyst at Siete Generale. “We will continue to wait for firm signs of a recovery in semiconductors, but concerns about a slowdown in the Chinese economy are increasing.” As it grows, there is a possibility that Korea's short-term export prospects will deteriorate," he told Reuters.
“The recovery of exports to China is being delayed due to the slowdown in normalization of the Chinese economy after the pandemic,” said Park Sang-hyeon, an economist at HI Investment & Securities. “Shipments to the European Union (EU) and the United States are also losing momentum, and they are It is providing at least some support to exports," he told Reuters.
Statistics from the Korea Customs Service show that exports from August 1 to 20 amounted to $27.856 billion, a 16.5% decrease from the same period last year, marking the 11th month of decline since October of last year. The sharp decline in exports to China is due to a sharp decline in exports to China, with semiconductor exports reaching 40%, down 24.7% from a year ago. led by a decline.
The trade deficit in August was $3.566 billion, more than double the deficit of $1.35 billion in the same period last year, and this year's cumulative trade deficit increased to $28.404 billion.
The U.S. trade deficit with China increased 8.3% from the previous year to $382.9 billion last year.
Reuters reported on the 29th, “The United States and China used to be each other’s biggest trading partners, but Washington now trades more with neighboring Canada and Mexico, and Beijing trades more with Southeast Asia.”