ARE THE FORCES THAT INFLUENCE CHINA’S TRADE SURPLUS OVER U.S. ACTUALLY GOOD FOR BOTH COUNTRIES? INTRODUCTION Over the last two decades, China has been increasing its trade surplus. To run into a surplus mean that the amount of goods a country exports is far less than its imports. According to the World Bank (2010), China reported a surplus in the balance of trade equivalent to $US 1.7 Billion in April of 2010. Furthermore, before the financial crisis, the Chinese economy had a record from 2006 to 2008 with the fastest-rising Gross Domestic Product (GDP) in 11 years. The effect of this enormous growth has captured world attention, due to the fact that the large trade surplus China is with U.S has been leading to several issues in both …show more content…
China’s monthly trade balance trend is clear; from 2004 China´s surplus was increasing rapidly, the peak was reached in 2008 before the financial crisis started. Many economist and experts in world trade have been carrying out studies in order to understand the real influence of the forces creating the China- U.S bilateral trade surplus. Morrison (2009, pp 2) as well as Lardy (2008, pp 12) are concerned about how the Chinese government is overcoming the current global crisis by the manipulation of its currency. In addition, another fundamental cause of China trade surplus with U.S is the Chinese excess savings (ART 9 PP 5, ART 7 PP9) 1. Exchange rate manipulation ´´Currency manipulation is the cause of the U.S. trade deficit with China´´ (Geithner, 2009 p8, Morrison 2009, p3, Feenstra 2006, p29 ) is one of the most common claims that economists make when regarding the current trade relationship between U.S. and China. Although several economic policy reforms have contributed to the management of the RMB (Chinese currency), the statement ´´ the larger China’s external surplus is, the more undervalued is the Yuan´´ established by Zhe (2007 p11) seems to clarify that China´s currency is being manipulated by the government. This kind these strategies in order to enhance its competitiveness. This currency manipulation is becoming a difficulty for U.S and China´s
From January until October in 2010 imports from China to the United States this year were $299,026.0 million and only $72,276.2 million in exports to China, leaving a U.S. trade deficit of -226,749.8 million - this is according to the U.S Census Bureau U.S Foreign Trade Statistics. Here we can examine that Chinese
For the last twenty eight years, China has been quickly growing into one of the largest economies in the world. China has accomplished this feat, in part, by radically changing their policies on trade and free market interactions with other countries. During this process, China has bought approximately one hundred trillion dollars of United States debt in the form of Treasury bills, notes, bonds, and Inflation Protected Securities (Amadeo). This debt has given China leverage against the United States which has enabled China to keep the value of the United States dollar high, while keeping the value of the Chinese yuan low. As the inflation of the dollar continues to negatively affect the
The influence China is having on the United States is extraordinary. As America continues to drastically import and purchase from China, China is purchasing and investing in valuable American assets. Some of these assets include energy, entertainment, food, aviation, minerals, land and other businesses. Although we operate in a global economy, the positive short-term gains by American companies selling to foreign investors may lead to negative long-term consequences. Countries such as China are literally buying tangible assets on American soil. This trend could affect commercial prices, resources, supply and demand. When a foreign company or individual owns rights to assets in the Unites States, American citizens could be subject to their conditions. Americans could be at the mercy of market conditions set forth by an entity to whom we are directly competing with on a global scale. For better or worse, China has great influence on inflation, monetary policy and acquisition within our own borders.
Modern use of birth control pills has given women a sense of independence, to gain employment and express their sexuality freely, while mid-twentieth usage of birth control came with an increased stigma, less access to the pill, and a positive and negative impact on marriages.
China’s economical strength comes from its international trades as the economy has grown to a rate of 10.3% in 2010. It has become the world’s largest exporter in the global economy. In the
Although China has an inexpensive currency, its trade balance has been decreasing and for a few months in the beginning of 2004, it actually turned into deficit. With the recent industrialization, there has been a large increase in machinery, metals, and petroleum imports. Over the last year, there has been a large rise in the prices of crude oil, copper, and steel. A stronger Yuan would help to
“The real currency war is actually between Chimerica -- China plus America -- and the rest of the world,” Ferguson said in an interview at the World Knowledge Forum in Seoul. “It would be much better to have some kind of Plaza-like international agreement and I very much hope that at the G-20 summit in Seoul next month this will be No.1 on the agenda.” The Plaza Agreement reached in 1985 prompted a decline in the U.S. dollar against its Japanese and German counterparts. Brazilian Finance Minister Guido Mantega said last month that a “currency war” was under way, in which economies are weakening currencies to support exports. At an International Monetary Fund meeting this month in Washington, finance chiefs failed to narrow differences over currencies, with China accused of undervaluing the yuan and low U.S. interest rates criticized for flooding emerging markets with cash. “Currency appreciation is necessary,” Ferguson said in the interview late yesterday. “If you insist on building up a vast horde of dollar-denominated reserves you will create distortions in the world economy that will ultimately come back and bite you.” China doesn’t need a dollar peg, because its workers
Tariffs are defined as a tax on a product exported from one country and placed on the importing country. Placing tariffs on China will help balance out the United States’ trade deficit with them. China’s increase in exports and decrease in imports, coupled with the devaluing of the yuan puts them in the perfect position for imposing tariffs. China wants to sell much more than they import rather than keeping a stabilized economy (The Great Fall of China 11). If tariffs are put on what little imports they have from the United States, then that will start to bring the trade deficit between the two countries towards zero. Switching from reciprocity to having a substantial amount of
In 2013 Yuan appreciated by 2% as People's Bank of China allowed market forces to push the Yuan. Exporters have been hit hard by this move who relied on weak currency to remain competitive in international markets. But this controlled rise of the currency has still left countries sceptical that China will not intervene in forex market. Chinas forex reserves have increased tenfold in the past decade. Due to the resulting trade surplus central is forced to intervene to preven the Yuan from appreciating.In the 3rd quarter of 2013 China's forex reserves have increased by more than $163 billion to a record 3.66 trillion US dollars.. Despite a 0.3% decline in exports in September agaisnt an expected 6% rise , the increase in forex reserves is a clear evidence of market intervention by the central bank. In March central bank deputy governer said that China will reduce its interventions and will follow a more flexible currency policy. But an analysis of export data shows that central bank intervened in the currency market to prevent fluctuation of the currency. Even though Yuan has strengthened by 4-.4.3% over the past 2 years economic growth drivers have not shown any significant change.
Abstract: Recently, the appreciation of RMB has been a hot topic and caused a heated debate. For China, it not only involves the changes in the RMB revaluation, but also affects China 's external trade. Through reviewing the RMB
The foreign reserved of China is valued at $3.8 billion that is highly attributable to the foreign exchange policy adopted by People’s Bank of China. There is a need for a different theory to provide reasonable explanation for the persistence of Chinese monetary regime despite the fact that there is a negative correlation between the growth of foreign exchange reserves and money supply.
According to Burger (2008) “Accounting is the language of business. A lot of people think it 's just numbers, but it 's really a lot more than that. There are a lot of areas outside of numbers that need to be looked at, processes and procedures, what the tone of the company is. Accounting will take you in just about any direction in a company." ~ Wade Becker, CPA, Beard, Miller Co.
In the statement of the 2015 Article IV Consultation Mission to China, the International Monetary Fund (IMF) concluded that the Chinese economy was transitioning to a safer and higher-quality growth. In particular, the IMF highlighted that China had made good progress in recent years in reducing its large current account surpluses and its huge accumulation of foreign exchange reserves. Although undervaluation of the yuan was a major factor causing the large imbalances in the past, the appreciation of the yuan over the past few years had brought the yuan-USD exchange rate to a level that was no longer undervalued.
In the play Macbeth by William Shakespeare, the characters are often mislead by the impression of reality. The quote “fair is foul and foul is fair” (Shakespeare 1.1.12), is said by the three witches. This quote is very significant, as it is an elaborate theme throughout the play. Also, the word "fair" means good, and "foul" means evil. "Fair is foul and foul is fair" is a theme that demonstrates how appearances often differs from reality. This theme can also be described as “Illusion vs. Reality” because within the play, many are blinded by false accusations and have difficulty coming face-to-face with reality. This theme is greatly expressed through the characters Lady Macbeth,
My interest in International Economics, led me to apply to the Seward Fellows program – an honors program at Union College – and as part of that program I designed an independent theme minor to analyze China’s trade. Since I applied to graduate one year early when I was a sophomore, I chose to compress my two-term Seward project in six weeks in the summer of second year. My Seward project was to investigate the behaviors of the yuan-USD exchange rate in the past ten years. After evaluating the growth rate of the ratio of China’s foreign reserves over imports from 2005 to 2014, I noticed that the year of 2009 was a turning point; before