Forget the US deficit on goods traded with China – America is running a massive US$2.6 billion surplus with China on services!
Granted, US$2.6 billion doesn’t look so massive compared to the overall deficit of US$202 billion in 2005. And it looks even smaller when you bear in mind that the overall deficit with China was fast approaching US$300 billion at the end of 2006.
By 2015, this services surplus could top US$67 billion, according to a study commissioned by the research arm of the US-China Business Council. This could mean 240,000 new, high-paying service sector jobs.
(We are talking IT, management consulting, financial services and high-end construction/infrastructure projects.)
Come 2015, the US goods deficit with China is likely to be somewhat lower. But it won’t be down to US$67 billion and the country’s global deficit will probably still be more or less the same – just spread more evenly among Asian countries.
India – which is keen to develop its manufacturing base – may well be one of the biggest beneficiaries.
It’s also worth noting that any potential ballooning in US service exports to China depends on Beijing first complying with commitments to further open up its markets and then implementing a transparent system through which foreign firms can participate.
Still, it is a lot for Congress to chew on for the time being.