Rising Incomes in China Means More US Goods Exports - Global Trade Magazine
  February 5th, 2018 | Written by

Rising Incomes in China Means More US Goods Exports

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  • US goods exports to China are on the rise and are likely to continue to grow.
  • Between 2011 to 2016, exports of cell phones and other household goods to China climbed 161 percent.
  • From 2007 to 2016, US pharmaceuticals exports to China increased 438 percent.
  • China’s GDP per capita doubled between 2010 and 2016.

Despite rising tensions between the United States and China on the trade front, the data show that US goods exports to China are on the rise and that they are likely to grow in the coming years.

For example, from 2011 to 2016, exports of cell phones and other household goods to China climbed 161 percent from $930 million to $2.4 billion, according to a recent report from the US-China Economic Security Commission. From 2011 to 2016, US cell phone exports to China expanded from $484 million to $1.6 billion.

From 2007 to 2016, US pharmaceuticals exports to China have increased from $402 million in 2007 to $2.2 billion in 2016, or 438 percent. China still accounts for a relatively small amount of US pharmaceuticals sales, suggesting there is still room to grow.

Behind these increases in exports lies a spike in China’s GDP per capita, from $4,560 to $8,123 between 2010 and 2016, according to the World Bank. “This increase in income has led analysts to predict growth in the size of China’s middle class, possibly facilitating more US consumer goods sales to China,” said the report.

According to the Economist Intelligence Unit, 10 percent of China’s population earned more than $10,000 per year in 2015. By 2030, 35 percent of China’s population will be in that high or upper middle class category.

In other developments conducive to US exports, the Chinese government enacted a series of tariff cuts on December 1, 2017, on 154 types of consumer goods. “Many products constituting top US consumer goods exports to China received tariff cuts, particularly pharmaceutical preparations and cosmetics,” the report noted. Beauty product tariffs fell from 8.3 percent to 3.5 percent following the cut, tariffs on antibiotics fell from six percent to two percent, and tariffs on other pharmaceuticals dropped from five percent to two percent.

Pharmaceuticals present many market opportunities in China. China’s population is aging, with an estimated 170 million people over the age of 65 by 2020. At least 110 million Chinese are diabetic, and in 2015 China accounted for 20 percent of worldwide new cancer cases (4.3 million).

Toiletries and cosmetics are also a growing market in China. From 2007 to 2016, US exports of cosmetics and toiletries increased 181 percent from $130 million to $366 million. These Chinese appear to prefer imports of these types of products. Nine of the top ten personal care companies in China were foreign companies in 2016. The top three were Procter and Gamble (headquartered in the United States), L’Oreal (France), and Shiseido (Japan).

China’s spending on cosmetics and toiletries is expected to be on the rise. Per capita spending on these products in 2014 was $24, much lower than in other regional countries such as South Korea and Japan, with spending of $223 and $174 per person per year, respectively. China’s market is expected to become the world’s largest for cosmetics and toiletries between 2021 and 2026.


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