BOK: "Increase in US Imports from China... Trade Dispute Levels Recovered"

Bank of Korea Overseas Economic Focus

[Asia Economy Reporter Kim Eunbyeol] Recently, the United States' imports from China have significantly increased, recovering to levels seen before the trade dispute. The expansionary fiscal policy stance in the U.S. has boosted import demand, and the tariff hikes between the two countries have eased, leading to the rise in import volume.

According to the Overseas Economic Focus (Recent Trends in U.S. Imports from China) released by the Bank of Korea on the 9th, U.S. imports from China have increased substantially since the second half of last year, surpassing the pre-trade dispute levels in terms of value.

Following the COVID-19 pandemic, the U.S. government greatly expanded fiscal spending to support economic recovery, causing imports to initially surge. The quarter-on-quarter growth rate of U.S. imports, annualized, recovered from -54.1% in Q2 of last year to 93.1% in Q3 and 29.8% in Q4. The first quarter of this year recorded a 5.7% increase.

By product category, major import items such as electronic devices, machinery, toys, and textiles have increased significantly since the end of last year. However, China's market share in U.S. imports remains lower than pre-trade dispute levels.

The Bank of Korea forecasted, "With the Biden administration's continued expansionary fiscal policy stance and the use of human rights, technology, and environmental issues rather than tariffs as pressure tools against China, imports from China are likely to increase for a considerable period." It also explained, "The U.S.-China trade agreement lowered the average tariff rate on Chinese imports, and the Biden administration's avoidance of high tariffs as a trade pressure method also contributed to the increase in imports from China."

However, it added, "If the effect of U.S. stimulus measures is concentrated on increasing imports from China, the political pressure on the Biden administration could intensify, making it difficult for the growth in imports from China to continue over the long term."