People often comment that everything they buy seems to be made in China. Certainly Chinese production and exports have increased dramatically since their economy has been integrated into world trade, and N.C. State University economist Mike Walden says that we can now put a number or percentage on the amount of Chinese products we buy.
We can now … because our friends at the Federal Reserve Bank of San Francisco recently went ahead and compiled these numbers. And first of all, what they showed is that 70 percent of what we buy as consumers is on services. And of those services, only 4 percent are imported services.
You might say what’s an imported service? Well, when you travel to a foreign country, that’s actually an imported service. Or, for example, a company in the U.S. that uses foreign-based lawyers would be an imported service.
So, 70 percent of what we spend is on services, and a very tiny percent is on foreign-owned services. And none of that, incidentally, is on China.
So really when people say that everything we buy is made in China, they’re looking at durable goods. And if you look at durable goods, two-thirds of durable good products that we buy are actually still made in the U.S. Now 12 percent of the durable goods that we buy are made in China, but only half of that 12 percent is using Chinese inputs. The rest China does by assembling parts that come from other countries.
Now in terms of categories of durable goods that we buy, the largest percentage that comes from China are for furniture household equipment and for clothing.
So, clearly China has become a bigger part of world trade, but it’s actually not correct right now to say that everything we buy is made in China.