WorldCity, Annual Report: No. 4 China - Trade skyrockets | Connecting Local Business Leaders To The Global Economy

Annual Report: No. 4 China - Trade skyrockets

July 6th, 2006

Behind an 88 percent rise in imports from China, Asia’s powerhouse has become one of Houston’s fast-track trade partners.

China – one of Houston’s rare trade partners not focused on the energy sector – pulled a coup in the import category.

Houston’s imports from China rose a stunning 88 percent in 2005 to total $4.4 billion and make the Asian nation one of Houston’s fast-track trade partners. Among top traders, only imports from the United Kingdom and Angola saw stronger gains. Those were driven by energy commodities.

Houston’s exports to China held steady at $1.5 billion as overall trade between the Customs district and the Asian nation rose 55 percent to $5.9 billion. Houston closed 2005 with a $2.9 billion trade deficit with China.

Houston is best known as an energy hub and most of imports from other nations come in the form of oil or gas. Not so with China, the Customs district’s most diversified trader. That said, Houston’s most valuable import from China was destined for the energy sector: $346 million in pipeline and tubes. That was a gain of 266 percent compared with 2004.

But Houston imported $215 million in Chinese computer parts, a jump of 4.5 percent, and it brought in twice as many toys as the year before. Meanwhile, imports of video recording equipment blasted upward, rising 442 percent to nearly $153 million. Furniture imports also were up, to nearly $136 million.

Despite impressive import growth, Houston closed 2005 as the tenth most important Customs districts for cargo to and from China. Houston’s $5.9 billion in trade was just a fraction of the $102 billion posted by Los Angeles, the top U.S. gateway for China.

Port of Houston Authority Chairman James Edmonds expects continued growth in the Houston-China relationship. Keith Miceli, vice president of the World Department at the Greater Houston Partnership said, on average, Houston sends a trade delegation to China once a month.

The Houston Partnership’s July 2006 trade mission planned visits to Shanghai, Beijing and the port city of Dalian in the Liaoning region of Northeast China. The mission was to focus on the energy sector, with Houston government, university and medical sector leaders participating.

One of the goals of the trade missions is to forge new export opportunities for Houston-area businesses. In 2005, acyclic alcohols such as butanol, ethyl and hexaonol led the export list. While they totaled nearly $184 million, they were down almost 10 percent compared with a year earlier. Exports of cyclic hydrocarbons – petrochemicals such as styrene, xylene and toluene – were the second most valuable exports. They, too, fell from 2004 levels, dropping 32 percent to total just more than $161 million.

Cotton exports, however, were on the rise. They hit $85.5 million, up 168 percent from 2004 levels.

Exports of acetic acid, an industrial chemical used in the production of polyethylene – a component of plastics production – came in fourth at nearly $84 million, jumping 28 percent compared with 2004. Acetic acid is also used in the food industry.

China’s dependence on petroleum imports has prompted the Asian giant to look at oil exploration at home. That has created a demand for offshore oil drilling technology, machinery and equipment – a market that Houston companies could serve. One of China’s development strategies is to double oil output by 2010.

Last year, Houston shipped nearly $81 million in seamless iron and steel pipes used in oil wells, up 114 percent from the year earlier. Exports of machinery parts also rose, jumping nearly 33 percent to $76 million.

According to the Chinese Consulate General in Houston, China is allowing certain oil industry equipment, including drilling tools and high-tech geophysical prospecting software and positioning systems, to enter the country duty-free.