America owes $1.2 trillion to the now largest trading nation in the world, with imports and exports for China totaling $3.87 trillion for 2012, barely beating out the United States which had $3.82 trillion in total exports and imports. What is contributing to the massive jump?
For starters China’s economy is, according 2011 statistics, half the size of the United States in terms of GDP, with nearly three times the people. Energy consumption as China becomes more developed has increased exponentially, especially as the biggest car market (like we saw in Country Driving) continues to explode. Not only are parts being manufactured in China for vehicles but as they import raw materials to be assembled into finished products and then re-export them.
Economists to no surprise were skeptical of the data, especially given the large jump (25%) over the previous year’s data. “This trade imbalance is not representative of the amount of goods actually produced in China and exported to the U.S., but this perspective tends to get lost amidst the heated political rhetoric in the U.S,” said Eswar Prasad a Cornell economics professor.
The figures are calculated by customs declarations assembled by the respective General Administrations of Customs for the respective countries.
The news comes amid the Federal Reserve’s release of its U.S. government debt holdings release which shows China’s holdings of US debt at $1,170,100,000,000.