Introduction There have been numerous calls by the US policy makers for China to allow its currency to float freely. Critics have pointed out that China policy of manipulating its currency preventing it from appreciating has given its manufacturers undue advantage. Both goods sold domestically and those exported by Chinese Manufacturer are relatively cheaper than those of manufacturers from economies whose Chinese currency is undervalued against; especially the US. This aspect has been accused of contributing majorly to the annual large US trade deficits. Probably due to pressure, China has been allowing its currency to appreciate. For instance it allowed its currency to appreciate against the US dollar by 21% from July 2005-2008 (although a 30.1 US trade surplus was still experienced). Although it halted the appreciation due to the global financial crisis, it later in June 2010 up to August 2011, allowed its currency to appreciate against the US dollar at lower pace of 6% (Morrison & Labonte, 2011). What would be the real impact of Chinese currency appreciation on the two economies (China and US) is the question that begs for answer. Already there a conflicting views of the real benefits of such a scenario. On the case of China, it has been argued that an appreciation would hurt the competitiveness of its exports. In the case of the US, the expected benefit as result of stronger currency are undermined by what opponents have describe as potential increase in the price of China’s exports that would consequently affect American consumers and firms that use parts and component made from China. A stronger currency similarly might limit the ability investor to purchase US assets (Morrison & Labonte, 2011). Considering the Mixed re... ... middle of paper ... ...current trade deficit. Yes there will be benefits associated with increase global competitiveness of the US products. However, there are other factors not associated with Chinese currency affecting the US global trade competitiveness. A case in point is the fact that from 2005 to 2008 when China allowed it currency to appreciate by 21%, a 30.1% rise of US trade deficit with China was still experienced. In addition by further putting pressure on China to devalue its currency, US runs a major risk of losing on capital inflows coming particularly from Chinese investors. Works Cited Morrison, W. M., & Labonte, M. (2011). China’s Currency: An Analysis of the Economic Issues. Congress Research Services Report. Retrived December 14, 2011, from http://www.fas.org/sgp/crs/row/RS21625.pdf. Murshed, S. M (1997). Macroeconomics for Open Economies. London: Dryden Press.
ban on foreign trade due to the fact that the value of Chinese goods is more expensive
The picture in China during the recession had been quite different than in the U.S., as demand for steel to build cars, bridges, and appliances helped prop up global steel prices. However, demand in China has slowed and brought fears of China exporting ...
It is common knowledge that communist countries often do not keep their promise of utopia for the common man, abundance and equality for all. China in the 1900s, as described in I Love Dollars: And Other Stories of China, published in 2007, is no exception. The story takes place in a power plant factory in which many workers experience a living hell of corruption on a daily basis. The government does not care for the workers, and for one of them, Xie Weigang, even leaving the factory is a difficult task. According to Jonathan Spence, Zhu Wen, the author of the aforementioned book, “is from a third generation. He was born in 1967, at the beginning of the Cultural Revolution, and raised during that period of frenzied trashing of China’s traditional
Thus, imports of American goods are under less competitive pressure to keep prices low. Thus, weak dollar benefits U.S. exports by making American goods cheaper in foreign countries. Foreign tourists can afford to travel and visit the United States. When the dollar is falling, foreign purchasing power is increasing. Purchasing power is the amount of value of a good or service compared to the amount that you paid.
Globalization has caused the world to change. Our country, China has been dramatically changed by globalization. Our people have moved to cities, and our industry has exploded. We have had huge advances in technology along with education improvement. Despite the fact that China has changed so much, there are still many issues that plague it. China faces serious environmental concerns. New diseases and viruses that are not indigenous to China can cause a wide range of sickness in the new area. Despite some of the the improvements in China that are a result of globalization, the negatives that globalization has brought to China are more than the benefits.
by a world power can be felt by practically every nation of the globe involved
To balance the trade deficit, U.S. has been borrowing money from other countries including its biggest trade partner: China. It is possible to borrow money from many other countries especially when such country like U.S. have other countries trust. However, it is not the same as how it used to be in the past. As a result, U.S. cre...
The US acquiring territory in the region of Asia made the ties between them stronger. China had many goods that the US was interested in such as tea, silk, porcelain, etc. Trading ports that were set up in the Pacific allowed Americans to trade with Chinese merchants. The global expansion of the US also led to an Open Door policy for China which allowed for much more involvement in politics and trading.
The business reason that led for China Noah’s potential currency exposure is the fact that the company wanted to shift its business of procurement of wood to Indonesia. The procurement that was to be moved to Indonesia was to be that of a large portion of raw materials. The company wanted to shift its procurement to Indonesia because the country had abundant wood resources, and since the market of the supply of tight wood was increasing in China every year the company had to look for more, raw materials. The company
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
The current trade imbalance is caused in large part by intrinsic features of China's labor market and consumer base. The vast majority of China's 1.3 billion people still live in rural areas. China has, by some estimates, a surplus rural labor force of 120 million people, many of whom migrate to industrial centers to look for factory work, and drive down wages. As long as wages are low, the United States will continue to gobble up products made in China, while Chinese consumers will prefer to buy cheaper, homespun alternatives to American products. The rise in trade deficit with China has come at a cost to jobs in the United States, accordin...
...es currently does possess an enormous trade deficit, but the importance of this problem and the best means of solving it is a sharply debated issue. Clearly, while a return to protectionist policy would have some positive effects in the short run, it ultimately would undue the enormous growth that free international trade has caused for the US economy. The more moderate approach, of increasing domestic capital, reducing reliance upon foreign money and goods, and reducing government spending, deals with the situation much more effectively. A deficit is often times natural, especially in a wealthy country with a very strong economy, such as the US. Using these techniques, the negative aspects of the deficit can be overcome, while still ensuring the efficiency and affectivity of a liberal international trade system.
China's development is praised by the whole world. Its developments are not only in the economic aspect, but as well in its foreign affairs. Compared with other developed countries, China is a relatively young country. It began constructing itself in 1949. After 30 years of growth, company ownership had experienced unprecedented changes. Entirely, non-state-owned companies can now be more involved in sectors that used to be monopolized by state-owned companies.
In the race to be the best, China is clearly outperforming the United States. China has strong economic fundamentals¬ such as “a high savings rate, huge labor pool, and powerful work ethic” (Rachman, Gideon. "Think Again: American Decline). Their economy has grown an astonishing 9-10% over the past thirty years; almost double of what it used to be decades ago. China is also the “world’s greatest manufacturer and its greatest market” (Rachman). The continuing growth of China's economy is a source of concern for not only the U.S. but surrounding nations as well. One could argue that the U.S. need not worry about China’s growth because of the spread of globalization and that western ideologies would influence China to turn to democracy. Yet China has still managed to “incorporate censorship and one party rule with continuing economic success” (Rachman) and remains a communist country. Hypothetically, even if China does resort to a democratic state, this does not gua...
China has also expanded their trading industries with countries such as South Korea, Japan, Taiwan, ASEAN, India, Russia and Hong Kong. This has not satisfied the Chinese greed for income as they also export and import goods to American countries, name...