US-China Trade: Flatlining Year Over Year Growth

Some time ago, we discovered that we could diagnose the relative health of national economies by measuring the growth rate of trade between nations. Now that the data is available through September 2012, we're updating our analysis of the relative health of the economies of both China and the United States.

Our first chart shows where things stand with respect to the year over year growth rate of what each nation exports to the other:

What this chart tells us is that the value of trade between the two nations are continuing at near-zero levels of growth. For the U.S., that indicates a near-recessionary condition, while for China, this result indicates that nation is continuing in recession, now nearing its one year mark.

Next, let's look at our doubling rate charts, which illustrate the amount of time it has taken for the goods and services traded between the two nations to sustainably double in value. Our first doubling rate chart considers the value of the goods and services that the U.S. imports from China:

Here, we see that the growth of China's exports to the United States is continuing its trend of slow growth, while following its typical seasonal pattern. Typically, China's exports to the U.S. peak each year in the period from August to October, in advance of the U.S.' holiday shopping season.

In reality, because the value of the U.S. dollar has been falling with respect to the value of China's currency since early 2010, the value of trade shown in the chart above represents a lower quantity of actual goods and services traded today than what similar values in 2010 would indicate.

Next, we confirm that China's economy isn't growing very fast, as the value of goods and services exported by U.S. companies continues to be in the same narrow range it has been since December 2010.

Here, the falling value of the U.S. dollar with respect to China's currency means that this chart is also overstating the value of U.S. goods and services imported by China since 2010.

Comparing the two nations, the U.S. economy is currently performing better than the Chinese economy. However, that's not saying much considering the flatlining growth trend of trade between the two nations.