"But how can you live and have no story to tell?" Fyodor Dostoevsky
"China and the U.S. are shipping goods to each other at the fastest pace in years"
Sometimes you have to look behind the clickbait headlines to understand what's going on. So while U.S. Deputy Secretary of State Wendy Sherman had a face like a scalded cat during her recent Beijing encounter, in truth, the U.S. and China are joined at the hip and need to cooperate.
Sherman was on the receiving end of a tongue lashing from Chinese diplomats in full wolf warrior mode. That’s something you wouldn’t have seen five years ago, affirming China’s growing confidence, or maybe that they understand the reality of world trade.
Because, when you cut through the posturing on both sides, the data tells a story. China and the U.S. are shipping goods to each other at the fastest pace in years. It looks like the tariff war and pandemic never happened.
Consider this: over half of the shipping going through the Port of Los Angeles is heading to Mainland China or Hong Kong. A shipping bottleneck is developing owing to the fact the port can’t handle the rising throughput. And all this congestion is happening before the pre-Christmas rush kicks in. Somebody better tell America's kids that Santa may not get through this year.
The graph above, which draws on data from the Chinese authorities, tells a story of vibrant two-way trade albeit with an imbalance. As U.S. consumers continue to shop, Chinese factories are back in action pumping out products. Then when you account for the U.S. trade surplus in financial services, which it gains through the US$, that deficit in goods looks less troublesome. (More details are here in 'The Big Game')
The only conclusion to draw is that both sides have learned to live with punishing tariffs, a fraught political situation, while talk of decoupling is laughable.
We know that the U.S. and China use trade as a weapon in their wider geopolitical game. But, what does it say when the U.S. benefits from Chinese actions taken against Australia?
As this report states, the U.S. stepped-in to fill the gap in coal supplies to China with Australian coal blocked. And I thought the U.S. and Australia stood together. Perhaps not when there is money to be made and trade to be done.
Walter De Havilland was one of the last of the colonial coppers. He served 35 years in the Royal Hong Kong Police and Hong Kong Police Force. He's long retired.