On the general economic front, the top story of 2005 was the record U.S. trade deficit. It rose unexpectedly rose to an all-time high in October, as oil shipments soared and the United States set deficit records with China, Europe, Canada and Mexico, according to a Dec 14 Commerce Department report, the latest available.
The gap between what America sells overseas and what it imports rose by 4.4 percent in October to $68.9 billion, surpassing the old record of $66 billion set in September, the Commerce Department said.
So far this year, the trade deficit is running at an annual rate of $718 billion, by far surpassing last year's $617.6 billion imbalance.
A surge of Chinese imports pushed America's deficit with that country to a new monthly record of $20.5 billion. Through October, the deficit with China is running at an annual rate of $200 billion, far exceeding last year's imbalance of $162 billion, which had been the biggest deficit ever recorded with a single country. So it looks like we're going from bad to worse.
China also surpassed the United States as the world's top exporter of laptop computers, mobile phones and other information and communications technology devices in 2004, the Organization for Economic Co-operation and Development said on Dec 12. China exported $180 billion worth of so-called ICT goods in 2004, compared with U.S. exports of $149 billion.
It will take quite a few months before the OECD collects and reports the 2005 data, but its officials told Reuters in Paris that China was likely to maintain the top spot in 2005 as well.
Nor is China flexing its muscles only in the IT field. It has placed an order for an unspecified number of Airbus A320 jetliners in late November, right after the Chinese aviation officials had signed a letter of intent to buy 70 Boeing 737s. This order was valued at about $4 billion based on list prices, and time to coincide with President Bush's visit to Beijing. The Chinese officials made an oral commitment to buy an additional 80 of the Boeing narrow-body 737s as part of that deal, the Wall Street Journal reported on Nov 29.
Such "mega orders" were obviously timed to please and appease the western governments and public who are getting increasingly alarmed by China's newfound economic power.
Meanwhile, the U.S. also set trade deficit records with most of its major trading partners, including a $12.1 billion imbalance with the 25-nation European Union, a $8.1 billion shortfall with Canada, the country's largest trading partner, and a record $4.8 billion deficit with Mexico.
The fact that this is happening at a time when the U.S. dollar has strengthened defies logic and common sense, and brings the entire Bush administration global policy into question (see "The Worst of Both Worlds," Mar 2005).