State by State – China and Ohio Trade

With the seventh highest GDP in the nation, the state of Ohio is a significant player within the United State’s agricultural, manufacturing, and service sectors. Ohio’s GDP totaled US%583.4 billion in 2014, an increase of over US$130 billion in the past decade. The state’s primary industries include finance, insurance, and real estate, which together account for nearly 20 percent of Ohio’s GDP. Product manufacturing of non-durable goods serve as the state’s second largest contributor to its GDP, accounting for 0.44 percent of its growth in 2014.

Imports and Exports

China and Ohio have enjoyed a mutually beneficial trade relationship over the past years.  With 7.4 percent of the state’s imports arriving from China, the country is among Ohio’s most significant trading partners. Outranked only by Mexico and Canada, China is crucial to Ohio’s imports and totaled US$3.8 billion in 2014. Trade between Ohio and China has experienced massive growth in recent years, with exports from China to Ohio increasing by over 15 percent from 2013 to 2014.  

Ohio’s top import products include automobile gears and parts, as well as medical, surgical, and dental devices. The two sectors’ total imports compiled approximately US$3.6 billion and US$768 million, respectively.

At the same time, China is a significant destination for Ohio’s exports. Ohio’s total annual exports reached more than US$12.6 billion in 2014, with 18 percent of all shipments discharged to China alone.

Ohio’s largest export categories include soybeans, aircraft engines and parts, motor vehicle parts, and transportation equipment. Exports of soybeans from Ohio have increased dramatically in recent years, surpassing US$1.8 billion in 2014 and reflecting a 42.1 percent year on year growth. At the same time, automobile and aircraft manufacturing part exports from Ohio amassed over eight percent of the state’s total export last year.

RELATED: Exploring New Opportunities in China’s Aviation Industry

Ohio-China Relations

In addition to a healthy trade relationship, Ohio and China’s general economic and political ties remain strong. In 1979, Ohio and Hubei province established the first American and Chinese sister city and province relationship.

Ohio currently holds trade offices in both Hong Kong and Shanghai, while over 190 Ohio companies including Goodyear, Eaton Corp, and P&G operate within the nation. Over the past decade, exports from Ohio to China have grown by over 300 percent, a significant increase when compared to the 50 percent growth rate Ohio’s exports enjoy with the rest of the world.

Investment Opportunities

Agricultural Products

In the wake of recent food scandals and stricter food safety regulations, China has grown to rely on foreign food companies to satisfy its consumers’ demands. Ohio has been met with success in supplying China’s soybean market, with the U.S. Agricultural Trade Office in Beijing predicting an annual increase of 4.5 million tonnes in soybean imports from the United States to China over the course of 2015. Currently, China contributes to over 64 percent of the global soybean trade, with 38 percent of China’s soybean purchases arriving from America.

Ohio has also found a foothold in other pockets of China’s agricultural import demands. In addition to soybeans, the state’s main agricultural products include dairy and corn. Dairy imports from the U.S. to China grew by 30 percent over the course of 2013, and China has more than doubled its corn imports to 872,928 tons since May of this year.

Manufacturing

 Substantial manufacturing and investment opportunities can also be found within Ohio’s aircraft and automobile part industries. As China seeks to develop its own aircraft and automobile sector, the nation has in turn increased its dependence on foreign part imports. Aircraft and automobile exports rank as Ohio’s most profitable sectors and have expanded within recent years. In the past year alone, aircraft imports from the U.S. to China have totaled over US$13.5 billion, accounting for 59 percent of China’s total aircraft purchases from foreign countries. At the same time, China is the U.S.’s third largest destination for automobile part exports, totaling US$2.5 billion in 2014 – a growth rate of 13 percent from the previous year.

RELATED: Pre-Investment and Entry Strategy Advisory from Dezan Shira & Associates

Tax Treaty – U.S. Trade with China    

The United States has signed a Double Tax Treaty with China. This can reduce tax burdens under certain circumstances in both trade and any China legal establishment. Please seek professional advice for specific China investment requirements. Treaty details can be found here.  

Further Support from Dezan Shira & Associates

Dezan Shira & Associates can service Ohio-based companies that are looking to further develop their operation in China. The firm can help companies establish a direct office in the country and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at usa@dezshira.com.

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