The current US inventory growth rate is at a historic low, and the first quarter of 2024 is expected to enter active replenishment. The United States has entered the replenishment stage, how much is the driving role of China’s exports?

Zhou Mi, a researcher at the Academy of International Trade and Economic Cooperation of the Chinese Ministry of Commerce, believes that the impact of the United States replenishment of inventory on China’s exports, on the one hand, the United States has increased domestic consumption in the case of increased economic momentum, some of these consumption are imported from China, some are imported from other countries, and the increase in domestic consumption in the United States will not necessarily have a strong driving effect on China’s exports. Because the United States now diversifies its trade supply sources, China’s share in the United States import market has been dispersed to a certain extent. On the other hand, it also comes from the adjustment of the industrial structure of the United States. In the process of the development of the manufacturing industry in the United States, more raw materials and intermediate goods need to be imported, which has changed the status of importing final products. China is one of the world’s most important producers of intermediate goods, and Chinese manufacturing can help the development of relevant industries and enterprises in the United States. In addition, China has the world’s leading competitive advantage in some green products, including new energy and low-carbon technologies, which will provide a very important supporting role for the United States in replenishing its inventory and adjusting its energy structure.

Ni Yueju, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that the driving effect of the US replenishment on China’s exports is affected by the proportion of China’s exports and the intensity of US demand. From historical experience, products with a higher share in China grow faster; When the intensity of US restocking is greater, the average growth rate of China’s exports to the US of various products is higher. Although the share of Chinese exports in US imports has declined due to the impact of Sino-US trade frictions, China is still the top three importers of US imports. The largest decline in the share of China’s exports to the United States is concentrated in high-tariff products, and China’s traditional advantages are less affected, accounting for a relatively high proportion, such as light industry, clothing, small commodities, machinery and equipment, home appliances and furniture. It is expected that the pull of the current round of inventory replenishment to China’s exports may be concentrated in the real estate chain such as home appliances and furniture; Metal, machinery and other building construction chain; Clothing, textile and other consumer chain fields.

Li Hongbing, a professor at the School of Economics and Management of Beijing University of Posts and Telecommunications, believes that when the United States enters the replenishment stage, from the supply side, China’s higher share of products, the growth rate elasticity is often greater; From the demand side, when the United States restocking is stronger, the average growth rate of exports of various products to the United States is higher. In the past two rounds of replenishment cycles in the United States, the 2020-2022 period is a strong replenishment cycle, the export growth rate of China’s HS classified products to the United States is 5.7%, and the 2016-2018 period is a weak replenishment cycle, and the center is only 1.3%. Under the weak replenishment cycle, there is a small difference in the growth rate of China’s exports of various products, and it is necessary to analyze the impact on the demand side.

The share of China’s exports to the United States has fallen, but the proportion of competitive products is still high. As of November 2023, China’s share of US imports has fallen from 22% in 2018 to 14%, back to the level of 2006. Still, China is one of the top three U.S. importers, behind Mexico and Canada. Sino-us trade friction is the main reason for the decline in share, but it can not explain all, China’s exports to the United States non-tariff products are still a record high. After 2018, the United States imposed additional tariffs on China in four batches, and the products with the largest decline in the share of China’s exports to the United States were concentrated in high-tariff products, and non-tariff products exported to the United States reached a new high and were less affected. On the other hand, the share of China’s exports in the United States is also positively correlated with the import demand of the United States, and when the import demand of the United States rebounds, China’s exports can also be repaired to a certain extent. The advantages of China’s exports to the United States are concentrated in light industry, clothing, small goods, machinery and equipment, home appliances and furniture.

Source: China Textiles