By Robert Romano

China might need us more than we need them.

That is what can be concluded from an interesting piece from Chriss Street at Breitbart.com highlighting a new report from George Friedman of Geopolitical Futures.

The report states, “China is more economically dependent on the U.S. than the U.S. is on China. This is because the U.S. is not wholly reliant on China for any strategically important commodities or products, the U.S. has significant extra capacity in many of its manufacturing sectors, and the U.S. is resilient to Chinese retaliatory moves.”

Here, Friedman has a very good point.

According to the U.S. Trade Representative, “U.S. goods and services trade with China totaled an estimated $659.4 billion in 2015. Exports were $161.6 billion; imports were $497.8 billion. The U.S. goods and services trade deficit with China was $336.2 billion in 2015.”

The $497.8 billion of Chinese exports to the U.S. account for 4.5 percent of China’s $10.9 trillion Gross Domestic Product (GDP), and a whopping 23 percent of its overall 2015 exports of $2.15 trillion, not an insignificant amount of money from China’s standpoint, helping to produce one of its most critical assets — a horde of dollar-denominated foreign exchange reserves, currently valued at $3.1 trillion.

Notably, that number has been dropping dramatically since China’s economic bubble has begun collapsing, from nearly $4 trillion in 2014, as China used U.S. dollars it had stockpiled to shore up its banking system. Update: Since that time, the China’s stock of dollar-denominated securities has dropped from a peak of $1.8 trillion in 2014 to less than $1.6 trillion today.

That is why access to U.S. consumer markets is so critical to China’s current economic footing, and why it has a lot more lose than the U.S. does. Although China held a little more than $1.1 trillion of U.S. treasuries in September, that is only a little more than 5 percent of the $20 trillion national debt.

Simply put, the U.S. selling Treasuries to other central banks besides China is a lot easier than China making up for losing access to U.S. consumer markets. Even the U.S. Federal Reserve could fill in the gap if needed even if China suddenly decided to stop buying.

Yes, there are the U.S. services exports to China, noted by the Trade Representative, said to total about $45 billion a year in the travel, intellectual property (industrial processes), and transportation sectors. On the other hand, that is still a number far smaller than China’s $497.8 billion of exports to the U.S.

And then there’s the cheap goods we buy from China, but then again, those could be produced here or somewhere else. Doesn’t have to be China.

Many observers will likely point to the Smoot-Hawley experience of the 1930s as evidence of what can go wrong in a trade war. But really, that lesson is more so for the country that is the net exporter, in this case, China, which has far more to lose in such a scenario.

Meaning, the U.S. might have more leverage on a question over, say, China’s currency valuations of the yuan said to lower the prices of China’s exports to the U.S., and simultaneously increasing the price of U.S. exports to China. Or over its purchases of foreign exchange reserves, like treasuries, which no country is entitled to have access to. Or even over the question of Taiwan’s future status.

That is not to forecast what the Trump administration might do in dealing with China to improve relations going forward, but it does point to considerable potential U.S. leverage that can be wielded, which should be considered by policy observers in Washington, D.C. and Beijing as 2017 rapidly approaches.

Robert Romano is the senior editor of Americans for Limited Government.