Us and China

The trade between the United States of America and China have become essential aspects of this trade alliance, and these strategic trading partners have shed light to the world’s current economic trends, considering that the United States carries the largest economy while China has the second largest. When analyzing this trade and China and the United States relationship, there are important factors that need to be considered, such as the United States Trade Deficit, its consequences, relevant history of trade and diplomacy, and its imports-exports.

United States Trade Deficit Trade deficit occurs when there is a negative balance of trade. This has occurred in the United States recently, with a deficit 28 times larger than in the Reagan administration. Consequently, the United States imports exceed its imports, where there is a depletion of the United States currency to foreign market, without having a balanced input and output. According to the United States Census Bureau, in March of 2012, the United State’s exports totaled $9.8 billion while its exports totaled $31.5 billion. In 2011, the total amount of exports was $103.9 billion while its imports were $399.3 billion, resulting in a negative balance of $295.5 billion (“United States Census”, 2012). Even though the United States had a surplus in the area of services in 2011, the United States trade deficit pertaining to the trade of goods has been continuously increasing, creating an exacerbated program in the United States and the world economy. Specifically in China, its main source of imports to the United States is from non-oil manufactured goods. One of the issues at stake is China’s illegal currency manipulation, which needs to be addressed in order to thwart these consequences (Scott, 2012).

Consequences of Trade Deficit It is essential to analyze the impact of the trade deficit in order to surmount its trade implications. The 2011 Economic Policy Institute stated that 2.8 million jobs in the United States were lost from 2001 to 2010. When analyzing the economic crisis faced in the United States, it is important to note that this unemployment factor caused a great impact to millions of Americans. Furthermore, consumers in the United States are helping obliterate China’s trade deficit. The consumer in the United States is a desired target since this group continues to purchase items, amounting to 8.9% of export growth per year. It has a particular preference towards Chinese manufacturers due to its low cost (Rapoza, 2012).

Relevant History
China, with its large population, is considered one of the world’s most important trade nations and it is foreseen that China will continue being a key player in terms of trade and the economy. For about seven centuries, China has been an expert of trade, starting from the commercial city of Hangzhou. They were open to different cultures, and embarked on trade routes, travel, and commerce. In the 1400’s, China had a competitive advantage to the West, having infrastructure, technology, and global influence. While Western countries were emerging, China was completely ahead. However, this changed with China’s decision to close itself from the outside world from the 15th to the 20th century. In the 19th century, China began to engage in trade treaties and self-contained trade zones, but it did not create a massive impact compared to today (Tennakoon, 2012).
The economic reform that commenced in 1970’s altered the United States and China trade. Most importantly, China has reduced its tariffs from 43% to 15%. On November 10th, 2001, China joined the World Trade Organization (WTO) after more than a decade of negotiations. In Qatar, the WTO approved China’s entry, which means that a market of a population of 1.3 billion Chinese people would immerse themselves into global trade. During this meeting, 142 members agreed to China’s entrance into the global trading system. U.S. Trade Representative Robert Zoellick commented on the impact this would create regarding the United States and China, by stating “both are already major influences in world trade. Their participation in the WTO will be a boost for us and them” ("China officially joins," 2001).
After WTO’s decision to have China become a key player in the global trading system, both China and the United States have benefitted synergistically in this mutually beneficial trade relationship. From the year 1980, the United States and China were trading. However, it is important to note that the Jackson- Vanik agreement was still in place, which regulated trade with communist parties. Two decades later in the year 2000, this agreement was thwarted, where there was no limit to trade or sanctions just because of the country’s political inclination of communism. According to Griswold, “the re-emergence of China as a trading nation is one of the most important and far reaching developments in the last, oh, half millennium or so. After 500 years on the sidelines, China has rejoined the global economy”(Griswold, 2002).

Types of Imports from a United States Perspective When analyzing trade between the United States and China, it is essential to analyze what kinds of imports are coming from China to the United States and its reasons why. First, 75% of the goods imported from China are household items such as toys, lights, office machines, household items, appliances, accessories and clothing. For instance, the majority of the items that Wal-Mart sells, which include household appliances, clothing, shoes, children’s toys, household and office furniture all come from China. The reason why there is such an emphasis on importing items from China refers to the bottom line. China offers the lowest prices, and this is what consumers want (Chen, 2012). When analyzing the perspective of the consumer, Americans have been embedded with values of consumerism. In the United States, Americans, regardless of their socioeconomic background, are used to making massive purchases, whether it is to go back to school, to furnish a home, or buy new clothes. Consequently, ads are constantly finding ways to market new products and promote their existing products as a desired item that is on sale. Furthermore, a strategy to lure consumers is to demonstrate that their item is on sale, and that it is a great bargain to purchase it. This is where stores such as Wal-Mart come in. In order to provide the best and lowest price, it cannot work with American manufacturers, since the overhead and labor are too high. Thus, they have resorted to purchasing items from China, which offers low cost items and this is exactly what American consumers want (Chen, 2012).