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Overseas sales of made in Vermont products suffered a setback in November in
line with the precipitous drop in national exports that caused a record US
trade deficit.
After having turned up in October by an unsustainable growth rate of 20.5
percent, exports of goods from Vermont's companies, adjusted for seasonal
variation, pulled back $72.4 million, or 22.2 percent, in November to $253.9
million.
In comparison to the same period a year ago, exporting companies from the
Green Mountain State shipped abroad in November of 2004 $8.8 million, or 3.3
percent, less goods than in November of 2003.
The state-specific international trade numbers for November reflected a
blend of different trends in foreign demand for the state's major exporting
industries. Exports of manufactured goods - the foreign engine of state
economic development and a generator of factory jobs accounted for 61
percent of all sales abroad in November.
November's decline in overall exports was not widespread. Foreign shipments
from Vermont's factories went down sharply in November by 35.3 percent from
the previous month to $153.7 million, adjusted for seasonal variation. Also,
looking at the annual trend of exports, sales abroad from Vermont
manufacturers last November were $1.1 million, or 0.7 percent, lower than in
November of 2003.
However, exports of non-manufactured goods went up 12.9 percent in November
to $100.2 million, also adjusted for seasonal variation. This group of
shipments abroad consists of agricultural goods, mining products, and
re-exports which are foreign goods that entered the state as imports and are
exported in substantially the same condition as when imported.
At the national level, exports of goods in November - reported by the Census
Bureau on a seasonally adjusted basis fell 3.8 percent from October to $66.5
billion, led by steep declines in foreign sales to Canada, Mexico, the Euro
Area and Japan which combined buy sixty percent of all US exports.
The unexpected decline in exports, combined with an increase in imports,
resulted in an all-time high US trade deficit in November, which generated
news on trade policies, the role of the dollar and the future of American
jobs. Among the major trading partners, deficits hit records with Canada,
Korea and Russia; deficits widened with Japan and the European Union.
Although the largest trade deficit in November was again with China, a
shortfall of $16.6 billion, it improved in November. In times of record
negative economic numbers - especially for issues directly related to jobs -
the media, politicians and businesses need a scapegoat. Again, China-bashing
was the choice with the recent release of the trade statistics.
Should we blame - and to what extent - China for stealing US jobs, in
general, and Vermont jobs, in particular?
Since Deng Xiaoping introduced market reforms two decades ago, the Chinese
economy has grown at an astonishing average rate of 9.3 percent per year,
about three times faster than our economy. As a result, the world's most
populous country has also become an enormous economic market.
Using the World Bank's measure of gross domestic product (GDP) an
internationally accepted benchmark of production and national income
adjusted for price differences between economies which in a sense expresses
economic activity in dollar terms under a free floating currency - China is
second only to the United States with a 12.4 percent share of the world's
GDP. In 2003, the market size of China was $6.4 trillion dollars, about
sixty percent of the United States market, which registered $10.9 trillion.
China is the most dynamic large economy in the world and its markets are
booming. It has become an export power and the world's biggest market for
high ticket consumer goods like cars, appliances and telecom equipment. If
the current Chinese growth continues, in about a decade China will be the
world's largest economy.
Under this global economic environment, China's vigorous demand for raw
materials, parts and final manufacturing goods should be welcomed. In 1999,
China ranked as the sixth market for exports from the European Union and was
the twelfth largest destination of US goods. Just four years later, China
moved into third place as a market for exports from the European Union and
it ranked the sixth largest destination of all US exports.
In 2004 from January through November, national exports to China rose by
25.4 percent from the same period in 2003 to $31.5 billion; this compares
with an increase of 12.3 percent in foreign sales to the rest of the world.
As a result, demand for US made goods from China grew two times faster than
demand from all other countries combined.
As of November 2004, China was the fifth largest destination of all US
exports behind Canada, Mexico, Japan and the United Kingdom. Also, for the
first eleven months of 2004, Chinese buyers purchased 4.2 percent of all US
exports.
At the state level, consumers and businesses from the world's second largest
economy bought $63.7 million of goods made in Vermont in the first eleven
months of this year.
Looking at the global marketing efforts of state exporting companies to
penetrate the fast growing Chinese markets, the Green Mountain State ranked
fourth among the fifty states in 2004.
Compared to the same period of last year, January to November of 2003,
exports to China from Vermont increased by an astonishing rate of 128.2
percent. At the same time, worldwide exports from Vermont rose 29 percent.
Demand from China for Vermont's products grew four times faster than demand
from all countries combined.
Rapid growth in exports to China has been observed over the last seven
years. The trends indicate convincingly an increasing role of Chinese demand
for goods made in Vermont.
As China grows at about three times more rapidly than the industrial
economies, it becomes the fastest growing market in the world for goods made
in other countries and, as a result, an important and vital export market
for Vermont's companies.
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