HEARD ON THE STREET: America's Shield Against Chinese Contagion - WSJ.com
U.S. has limited exposure to downturns in Europe and China.
In Europe, if you tally imports and exports for the 17 countries using
the euro, and you will find that they roughly balance, with deficits in
countries like Spain offset by surpluses in other countries—primarily
Germany, reports WSJ.
To the degree exports are heading out of Europe, they are headed to
China. China has been a major destination for European exports in
general, and German exports in particular. As it has rapidly built up
its ghost infrastructure and industrial base, China has been heavily
buying equipment from Germany. Last year, Germany exported €48 billion
(about $60 billion at today's exchange rates) in machinery and
transportation equipment to China, according to the European Union's
statistics agency. That accounted for 11% of Germany's exports to
countries outside the euro area. This means China's domestic problems
could be magnified by the problems in Europe.
The U.S. exported $123 billion in goods to China last year, according to
Comtrade, the United Nations trade statistics database, versus Europe's
$178 billion, but much of the U.S. exports were more consumer oriented
than the capital good exports out of Germany and thus are less likely to
be impacted by a capital structure crisis in China.
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