The United States slipped from second to third on the world’s export leaderboard in 2006. In the second half of the year, American exporters found themselves not only behind Germany, but also behind a surging China.

The World Trade Organization reported that China’s exports grew by 27 percent last year. If this growth continues as projected, China will be the world’s second-biggest exporter for the whole of 2007 and will then surpass Germany in 2008 as the leading exporter in the world.

“Office and telecom equipment continued to be the mainstay of Chinese export growth, but significant gains in world market shares in 2006 could be observed in ‘traditional’ exports such as clothing and ‘new’ products such as iron and steel,” said the wto report released April 12. China also overtook the U.S. in vehicle manufacturing.

This growth has also created a voracious Chinese appetite for raw materials; unsurprisingly, it has become the world’s third-largest importer, behind Germany and the U.S.

Largely due to China’s massive exports to America, the equivalent of more than one trillion U.S. dollars now sits in China’s foreign exchange reserves. The Washington Times wrote that a lot of this money gained from exports to the U.S. “is saved and recycled back into the U.S. through purchases of U.S. Treasuries and other debt securities. That makes capital or cash China’s largest export to the U.S.” (April 13). Exporting money keeps the Chinese economy driving forward without the heavy baggage of inflation in its own currency, making Chinese economic growth far more sustainable.

With a massive domestic market powered by the world’s largest population, and exports soon to outstrip all comers, China’s powerful economy appears set to continue its startling growth. The colossal amount of resources needed to feed such an economy will require a reordering of the world’s economic structure. Competing with Germany and China, the U.S. has some difficult years ahead.