Did you know that the mainland is currently running an annual trade surplus with the United States at the rate of US$1,800 per second? A figure of US$1,800 does not seem like a great deal of money but then there are 31,536,000 seconds in a year. It is the equivalent of HK$14,000 and that is more than a Hong Kong taxi driver makes per month. We could pay half of Hong Kong's population to be taxi drivers on this surplus. Work it out and you get US$108,000 per minute, US$6.5 million per hour, US$155 million per day, US$1.1 billion per week, US$4.7 billion per month or US$56.9 billion per year. It's a great deal of money - more than the biggest annual trade surplus Japan has run with the US; in fact now almost certainly the biggest trade surplus that any one country has run with any other country at any time. And while US authorities are not saying too much about it at present, given that they are enjoying boom times, don't expect things to remain that way if the economic strains to which Federal Reserve chairman Alan Greenspan referred in testimony to Congress on Tuesday turn into something more severe. The US trade deficit last year came to almost US$20 billion a month, the biggest on record. Admittedly this still amounted to less than 1 per cent of US gross domestic product but when you get to such large numbers the absolute scale of them cannot be ignored. If American voters feel the pinch, they will scream and it won't take much screaming before their politicians start using their weight against smaller trading partners. It will hurt others more than it hurts the US if it happens. They are aware of it in the mainland too. Beijing tries to hide the statistics by treating exports routed through Hong Kong to the US as exports to Hong Kong rather than to the US. It says its trade surplus with the US last year was only US$18.8 billion, not US$56.9 billion. You can safely take Washington's figures as the more accurate. The irony is that it really has not done that much good for the mainland. The general rule of thumb is that poorer developing countries should run trade deficits as they import needed capital goods on which to build their growth. But what we have instead is an economy that has based its growth heavily on exports of light consumer goods which don't require much investment while its industrial heartland moulders for lack of modern equipment. Instead of contributing to investment at home, the mainland's balance of payments figures show that the money earned from the exports has gone right back out again, much of it undoubtedly to investment in the US. Thus a country which desperately needs investment capital has funnelled its money instead to a country which has a surfeit of investment capital. A big trade surplus is not necessarily a good thing at all. It can be a distortion of economic effort and in the mainland it probably is one. This opportunity to invest at home is being wasted and, if the trade surplus now dwindles, all of the benefits it could have brought will have been squandered.
