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Jan 2, 2013

Will Mexico Overtake China In U.S. Imports?

The Economist constructed this chart with data from the U.S. Department Of Commerce and HSBC. In 1990 China was still a small player in the international trade. Imports from the U.S. out of China were only 3.1 percent of the total U.S. imports. At the time Mexico was twice as big in the percentage of imports from the U.S. The biggest trading partners in terms of exports were Canada and Japan, both with a share of 18 percent. Especially Japan saw its share decline since the continuing crisis the country has been in from 1990. Today the import share that Japan has is lower than Mexico in 1990.

With the high economic growth in Japan before the 90s Japanese wages increased a lot. This gave opportunities to countries like China which at the time had an enormous potential cheap labor force to manufacture goods for exporting to the Western world. With the high economic growth in China wages are rising. Mexico seems the next country to benefit from low wages.

A likely reason why Canada is still a relatively big player is it's favorable location.

Due to a request by the Economist this graph has been removed. 



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