4th Quarter 2009

(Click on graph for larger view.)

 

Rapidly Growing State Exports

 
2002

2009

Aircraft
$0
$58,240,051
Nonwovens
$72,665
$40,932,653
Cellulose
$1,761,315
$33,757,405
Preparations of titanium dioxide $8,339,324 $32,797,996
Electro-diagnostic equipment $932,310
$19,196,703
Surgical catgut
$0
$13,140,565
Misc. polyesters $144,035 $9,409,873
Diagnostic/lab reagents $849,831 $7,742,999
Artificial joints $481,852 $7,442,772
Silica & quartz sands $164,780 $5,678,720

 

Chinese global exports, 2009

 

(Tennessee 's Trade with China)

continued from page 2

Which Tennessee exports to China are growing the fastest?

This turns out to be a tricky question to answer. Many state exports to China gyrate wildly, with mini-booms and busts. At any given time, one year's fastest-growing export could collapse the following year. If we ask instead which products are experiencing rapid and steady export growth, we get a set of goods such as that shown in this table. We have excluded the metal (and metal scrap) sector as well as artificial filament tow simply because they are discussed elsewhere. They certainly would be included in this list, but it's interesting to see what other goods make the cut as well. As you can see, the list is dominated by medical goods and chemicals.

What is China buying?

Chinese imports have grown by more than 400% over the past decade. In 2009, they broke the $1 trillion barrier. China is buying a lot! Consistent with Tennessee's experience, the vast majority of their imports remain in intermediate goods used in Chinese assembly or production of finished goods. The top 10 imports as shown in the chart represent almost four-fifths of China's exports.

How much would a stronger yuan help state exporters?

The best answer here might be to consult a psychic! A myriad of factors might affect how a change in the value of the yuan will (or won't) translate into additional exports. These include the effects of a currency revaluation on the values of third currencies, the extent to which Chinese production is sensitive to import prices, and how much trade is relatively insulated from currency changes because it is either priced in dollars or involves shipments within the same company (or foreign affiliates). There is also great debate about the extent to which the currency is undervalued in the first place. Estimates range from 0 to 40%.

In the case of Tennessee, it appears that the maximum impact of currency changes occurs with about an 18-month lag. Based on that lag and trade statistics after 2005, simple models suggest that Tennessee could gain about $282 million in exports to China per year should the Chinese currency gain 10% in value. However, this calculation is sensitive to a number of assumptions and should be taken as a pretty rough estimate. Nonetheless, it suggests that a revalued currency could substantially help state exporters.

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