Trade Imbalance Between United States and China
Trade Imbalance between United States and China
Table of Contents
Abstract 3
Introduction and Background 4
Problem Statement 5
Discussion 6
Conclusion 9
References 10
Appendices 12
Appendix A - The Yuan/dollar exchange rate and the U.S. trade deficit with China 12
Appendix B-1 Jobs displaced due to U.S. trade with China, by state, 2001-2011 (ranked by jobs displaced as a share of state employment) 13
Appendix B-2 - Jobs displaced due to U.S. trade with China as a share of state employment, 2001-2011 15
Abstract
The existing trade imbalance between the United States and China has prevented any opportunity of reaching a free trade agreement. The imbalance has often been blamed on an aggressive negotiation process; however, low quality and replica products that hurt the trade relationship and are harmful to consumers are also to blame. Although action has been taken to curb these negative relations, change has not yet come to fruition. It is apparent that each country has a comparative advantage over the other in production of different goods, but there still exists an imbalance disproportionately favoring China largely due to currency manipulation and labor costs which creates problems for the United States. Despite China’s advantage, future non-trade benefits may be realized by the U.S.
Introduction and Background
The study of international trade often refers to the following terms: absolute advantage, comparative advantage, and opportunity costs. The Theory of Absolute Advantage is an easy-to-understand concept that simply states that if our country can produce certain goods at a lower cost than a foreign country, and if they can produce certain other goods at a lower cost, then we should trade our goods to the benefit of both. Absolute advantage does not consider opportunity costs limiting evaluations to straight production. Opportunity costs are the differences had an alternative been selected. An example of
Table of Contents
Abstract 3
Introduction and Background 4
Problem Statement 5
Discussion 6
Conclusion 9
References 10
Appendices 12
Appendix A - The Yuan/dollar exchange rate and the U.S. trade deficit with China 12
Appendix B-1 Jobs displaced due to U.S. trade with China, by state, 2001-2011 (ranked by jobs displaced as a share of state employment) 13
Appendix B-2 - Jobs displaced due to U.S. trade with China as a share of state employment, 2001-2011 15
Abstract
The existing trade imbalance between the United States and China has prevented any opportunity of reaching a free trade agreement. The imbalance has often been blamed on an aggressive negotiation process; however, low quality and replica products that hurt the trade relationship and are harmful to consumers are also to blame. Although action has been taken to curb these negative relations, change has not yet come to fruition. It is apparent that each country has a comparative advantage over the other in production of different goods, but there still exists an imbalance disproportionately favoring China largely due to currency manipulation and labor costs which creates problems for the United States. Despite China’s advantage, future non-trade benefits may be realized by the U.S.
Introduction and Background
The study of international trade often refers to the following terms: absolute advantage, comparative advantage, and opportunity costs. The Theory of Absolute Advantage is an easy-to-understand concept that simply states that if our country can produce certain goods at a lower cost than a foreign country, and if they can produce certain other goods at a lower cost, then we should trade our goods to the benefit of both. Absolute advantage does not consider opportunity costs limiting evaluations to straight production. Opportunity costs are the differences had an alternative been selected. An example of
References: “Bloomberg view” (2012). Bloomberg view: smart trade with China. Bloomberg Businessweek, Retrieved from http://www.businessweek.com/articles/2012-11-01/bloomberg-view-smart-trade-with-china#disqus_thread Chen, R Edmonson, R. (2007). Toxic trade. Journal of Commerce. Retrieved from http://ezproxy.bellevue.edu:80/login?url=http://search.proquest.com/docview/312953278?accountid=28125 “Freedom to trade” (2012) Hays, J. (2008). Cracking down on counterfeiting in China. Facts and Details, Retrieved from http://factsanddetails.com/china.php?itemid=2243&catid=9&subcatid=61 “Is China a currency manipulator” (2011) Jameszol. (2012). U.S. Exports To China By State. Visulaeconomics.creditloan.com. Retrieved from http://visualeconomics.creditloan.com/us-exports-to-china-by-state/ Liu, S Maremont, M. (2012). Romney at Bain: big gains, some busts. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052970204331304577140850713493694.html Miller, T Stewart, T. & Drake, E. (2010). Written testimony for Committee on Ways and means hearing on China’s Exchange Rate Policy, U.S. House of Representatives, March 24. Wyler, G. (2012). Here 's what Romney and Obama REALLY plan to do about China. Business Insider, Retrieved from http://www.businessinsider.com/romney-obama-china-trade-2012-9 Comparative Advantage (n.d.) Trade Agreements (n.d.). Office of the United States Trade Representative. Retrieved from http://www.ustr.gov/trade-agreements “World’s Richest Countries” (2012).Retrieved from www.worldsrichiestcoutnries.com Source - (“Is China a currency manipulator”, 2011). Appendix B-1 Jobs displaced due to U.S. trade with China, by state, 2001-2011 (ranked by jobs displaced as a share of state employment) State