US imports from China in April 2022 hit a record high, despite the Shanghai lockdown and other Covid-19 related lockdowns in the Chinese economy.
According to the Asia Times news site, the Bloomberg news agency provided the opposite. So the agency’s 30 economists and 100 full-time reporters apparently couldn’t tell the difference between the seasonally adjusted and unadjusted data.
Unadjusted data shows a typical bouncing ball pattern over a 12 month cycle. It doesn’t make sense to make month-to-month comparisons without taking into account the pronounced seasonality of business patterns, Asia Times wrote.
The data above shows the seasonal adjustment performed on the Eviews econometric platform using the TRAMO algorithm. This is an approach used by most central banks.
According to an article published on June 7 by the Bloomberg agency, “The US trade deficit narrowed in April in the most recorded fashion in dollar terms, reflecting a fall in the value of imports amid Covid lockdowns in China while exports increased.”
Furthermore, “imports fell in April as factory activity in China fell to its lowest level since February 2020 amid strict lockdowns to curb the spread of Covid-19.”
“While manufacturing in China has since improved somewhat, the measures continue to strain already tenuous global supply chains, especially when coupled with Russia’s war in Ukraine. The deficit with China narrowed in April by $8.5 billion, the highest in seven years. Imports fell by $10.1 billion, also the most since 2015,” wrote the US Business News Agency.
For David P Goldman, of Asia Times, the reality is quite different, because despite the confinements imposed by the Covid-19, the Chinese economy continued to export more than ever to the United States. The data shows the resilience, not the fragility, of the Chinese economy and the ever-increasing reliance of the United States on Chinese industry.
So according to the economist, before Donald Trump’s tariffs went into effect, China’s reporting of its exports to the United States was consistently lower than that of the United States on its imports from Chinalikely because Chinese exports underreport export earnings in order to accumulate funds in overseas accounts.
However, after Donald Trump’s tariffs came into force in August 2019, Chinese export figures exceeded US import figures.
According to a June 2021 study, the Federal Reserve Board of Governors explained this change. According to him, ” Ihe U.S. bilateral merchandise trade deficit with China appears to have narrowed significantly since the escalation of the U.S.-China trade dispute in 2018, or so the US trade data suggests. By contrast, the Chinese data tells a much different story: the deficit, as China’s bilateral surplus implies, nearly hit all-time highs at the end of 2020″.
“Historically, the gap between these trade balance numbers has remained fairly predictable and stable. But with the start of the trade dispute, the values of imports from China reported by the United States fell more sharply than the values of exports to the United States reported by China.said David P Goldman.
Two reasons are probably responsible for this phenomenon: US importers underreport Chinese imports to evade US tariffs; and Chinese exporters report higher exports due to changes in tax incentives in China.