American Rescue Plan: China’s exports set for US$60 billion boost from ‘rampant US demand’

Chinese exports are likely to increase by US$60 billion over 2021-22 as Americans snap up computers, household equipment and clothing flush with US$1,400 stimulus cheques

The American Rescue Plan could increase China’s gross domestic product (GDP) by 0.5 per cent over the next year, according to the Organisation for Economic Co-operation and Development

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US President Joe Biden signed the US1.9 trillion American Rescue Plan into law earlier this month. Photo: TNS

Published: 9:55am, 25 Mar 2021Updated: 9:54am, 25 Mar 2021

David Ni is expecting a great year for his Chinese car-wheels business, thanks to the US$1.9 trillion boost President Joe Biden just gave to the US economy.

Americans flush with US$1,400 stimulus cheques mean “demand in the US is rampant,” said Ni, whose Jiangsu Siborui Import and Export, headquartered in Nanjing, buys high-end aluminium alloy car wheels from Chinese producers and sells them to retailers in the United States.

“Citizens get cash and they jump into shopping,” he said, predicting his sales will surge by more than 30 per cent this year.

The US fiscal boost will bring huge spillovers for the global economy, especially China, the world’s biggest exporter. Around US$360 billion of the stimulus package will be spent on imports, according to Allianz SE, with Chinese exports likely to increase by US$60 billion over 2021-22 as Americans snap up computers, household equipment and clothing.

But it also means rising prices for Chinese-made goods that have already started to tick up and a possible worsening in tensions with the US over trade imbalances.

While US neighbours Canada and Mexico will see the biggest impact relative to the size of their economies, the stimulus package could increase China’s gross domestic product (GDP) by 0.5 per cent over the next year, according to the Organisation for Economic Co-operation and Development. Bloomberg Economics estimates that a 1 per cent boost to US demand adds around 0.08 per cent to China’s GDP.

That means the economy could expand 9 per cent this year, according to UBS, which upgraded its forecast for China’s export growth in 2021 to 16 per cent, compared with 3.6 per cent last year.