US tourism sector outperforms as Americans buy fewer Chinese goods

For years China has been considered the factory for the world, a role that saw it supply most of the shoes, toys and clothes to US consumers. Now these roles are changing. US exports of services to China, especially travel, are growing rapidly while US imports of goods from China have been falling in recent months.

US export of services to China grew 10 per cent to roughly US$41 billion in 2014, faster than the 2.6 per cent growth of Chinese export of services to the US, according to official US data. The US trade surplus in services with China rose 14.5 per cent to US$26.8 billion last year.

In contrast, the US trade deficit in goods with China grew 7.5 per cent to US$342.6 billion in 2014, a new record, the data showed. US imports of goods from China fell from US$45 billion in October last year to US$31.2 billion in February, while US exports of goods to China dropped from roughly US$13.2 billion in October last year to US$8.7 billion in February.

"Total goods trade with China extended a rapid decline that began around November 2014. By a wide margin, the top US service export and largest service surplus to China in 2014 was travel, which represented 51 per cent of US service exports to China in 2014," said a report by the US-China Economic and Security Review Commission (USCC).

US exports of travel services to China more than doubled from roughly US$9 billion in 2010 to US$21 billion in 2014, a much faster growth rate than other services, said USCC, a US government body that advises US Congress on Sino-US relations.

"That reflects increasing tourism by Chinese to the US," said Edmund Sim, a partner at Appleton Luff, an international law firm. US service export dollars are boosted by Chinese tourists purchasing property in the US, Sim pointed out. "The US property market has been a pretty good investment for them."