A single trip to Wal-Mart can show the power of China 's economy. The tags on most of the retail items in the store have the familiar "Made in China" stamp. By simply watching the news over the past decade, Americans know that the reason the U.S. imports so much of its merchandise from China is because Chinese companies can pay their workers far less to manufacture goods than American companies can.…
References: Anonymous. 2010. ‘Can China Become the World’s Engine for Growth?’. The International Economy. 24(1): 8-36.…
In China Shakes the World, James Kynge gives a history and explanation of the Chinese economy. Kynge started writing the book in 2004 and it was published in 2006. The book is like a biography, giving experiences around 1982 when Kynge was a student at the Shandong University. It gives a detailed explanation of economic activities by China in the regions of Germany, Italy, China, and even the United States Midwest.…
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 imports to the United States were too high which makes U.S. Gross Domestic Profit (GDP) shrink because imports are subtracted to the Gross Domestic Profit. This trade deficit causes damage to the United States manufacturers and destroys jobs. Chinese products are very attractive because their low labor cost.…
China’s influence in the world economy was minimal until the late 1980’s but we are now seeing China being one of the most independent countries and leading the manufacturing producing market. China started with a fragile economy with minimal infrastructure from frequent revolutions and invasions in 1949. In the early 1980’s, China’s economy was still extremely weak as a result of its inward looking government system of a socialist planned economy under the Mao government. This resulted in living standards below world averages and economic growth at nearly zero. China has risen from the edge of economic obscurity to lead the world in terms of economic growth, and this is done is just over a quarter of a decade. The People’s Republic of China has transformed from a planned economy into a socialist market economy and is now the world’s second largest economy to the USA being number one, by nominal GDP at $7.3 trillion and by purchasing power parity (PPP). “Pay attention to what’s going on in China. “ – Jeff Mbanga – The Observer.…
China has pegged its currency against the U.S. dollar. If demand for dollars decreases (THERE IS PRESSURE FOR THE U.S. DOLLAR TO DEPRECIATE. IN THIS SETTING, CHINA HAS TO PURCHASE DOLLARS TO MAINTAIN ITS PEG)…
US politicians point to the rapidly accumulating foreign reserves held by China, now amounting to over $850 million, as evidence of currency manipulation. (The Times, 28Mar06). They make the case that maintaining the artificially low position of the RMB through foreign reserve accumulation deteriorates the US current account balance with China because it reduces the competitiveness of US industries with respect to price. Thus, they argue that an appreciation of the RMB would help to level the playing field for US companies and increase output which would, in turn, decrease the imbalance in the current account.…
Shenkar, Oded. 2005. The Chinese Century: The Rising Chinese Economy and its Impact on the Global Economy, The Balance of Power, and Your Job. Wharton School Publishing. Upper Saddle River, NJ.…
In the past few years China has started to have a great impact on the world’s economy because of its products which now can be found in almost every country. Having its goods “invading” the world’s markets the Chinese government is becoming richer and richer every day. If a country becomes rich, its goals start to rise and the will to have more power also rises, and its economy takes a big boost. This economic growth is what a country needs and mostly desires but the other powers see it as a danger to their economy and to their protection. A strong economy means a strong army which the country will create to protect its self or to mute other countries that oppose it. Since 1979 China’s economy has been growing 9 % each year and it has replaced the United States products in most of the Asian continent. Now days most of the Asian countries depend more on the Chinese goods then the ones from the United States. This is noticed from the comparison of the amount of goods exported from both these countries (Ross, 2005). After the market reforms made in late 1970s the Chinese economy has quadrupled and will continue rising more. China today consumes a third of the world’s supplies of iron, steel and also coal and has become a major manufacturing center (Ikenberry, 2008). The trends show that the Asian countries depend more on China’s economy rather than the United States, so is clear that the United States influence in these countries is becoming weaker. This means for the United States that the money is lost; products are not sold (Ross). Considering all these facts it is obvious that if China’s economic growth continues not only East Asia but also the United States will be threatened militarily and also economically by the new power.…
In recent years, the level of distrust has skyrocketed due to currency manipulation, or the tool used by the P.R.C. to keep its currency value low in order to keep exports cheap. While most all trading nations participate in currency manipulation, China is one of the largest culprits. In order to have an undervalued currency, a nation must be buying more than they are selling. The Chinese, with their cheaply made products and underpaid workers, export colossal amounts of products all around the world for inexpensive prices. At this point it is clear to see that the Chinese are selling more than they are buying, or exporting an enormous amount of goods and importing less. This fact should mean that the Chinese currency is strong and the value of the Chinese yuan should be driven up. The Chinese government does not want the yuan’s value to go up because than China’s exports will be more expensive and less appealing for other nations to buy. So to keep the cost of the yuan down, China uses its incoming wealth to buy tremendous amounts of U.S. dollars. Therefore, the Chinese economy is technically selling more than it is buying, driving the value of the yuan down, keeping Chinese exports and wages low and driving up the value of the U.S. dollar. By buying U.S. dollars, the Chinese can maintain an extremely high GDP, or gross domestic product, which is the sum of all the money inside the country's borders at any given time. China can afford to maintain such a high GDP because their biggest import is money, keeping their treasuries full and their wages low. This trick costs America millions of jobs and makes China an economic superpower at the same…
The biggest problem with China’s growth is its challenge to the US’s economic sectors, mainly in manufacturing. Although we, as Americans, love less expensive items, importing those goods from China is removing those jobs to make the imports in the US. In fact, “between 2001 and 2008, the U.S. lost 2.4 million jobs as a result of increased trade with China” (Estrin). Low-cost labor in China is the major reason for this, and it is “blamed for bankruptcies and/or plant relocation to China, job losses, and stagnant U.S. wages” (Congressional Research Service, 2007). These jobs may not have an overall effect on employment, but “likely does have some negative effect on employment in particular trade-sensitive sectors of the economy,” such as in manufacturing (Congressional Research Service, 2007). Another job problem is that the labor force outside of the US has “all of a sudden doubled with the entry of India, China and former Soviet bloc countries into the liberalized global market in the recent period” (Izurieta, Singh). More people are available for the same jobs that Americans are doing, but other countries are willing and able to do them for fewer wages. As technology changes, China is growing faster than ever, and exporting many more electronic goods, and the US is falling behind in this innovation. Chinese workers have adapted to these new technologies much more quickly, but “Americans who can adapt and…
Tong, C., & Tong, L. (2008). The U.S. - China trade: An American perspective. Competition Forum, 6(1), 116-121.…
A currency that is overvalued, and which makes American produced products expensive in the world market compared to goods produced in developing countries such as China. On the other hand, imports are cheaper something that continues to keep many Americans out of jobs as more companies relocate production to places like China (EPI, 2013). The communist government in China has consistently undervalued the Yuan to promote itself as the low cost production destination of the world. That is something the American government has steered clear of doing to protect its economy.…
his Congressional Budget Office (CBO) paper discusses factors that would limit the benefit to U.S. manufacturers from a potential appreciation of the Chinese currency. In keeping with CBO’s mandate to provide objective, nonpartisan analysis, the report makes no recommendations. Bruce Arnold of CBO’s Microeconomic Studies Division wrote the paper under the supervision of Joseph Kile and David Moore. Inside CBO, William Randolph provided valuable guidance at several points in the development of the project, and David Brauer, Justin Falk, Juann Hung, Jonathan Huntley, and Mark Lasky reviewed various drafts. Outside CBO, Judith Dean, Michael Ferrantino, and Zhi Wang, staff of the U.S. International Trade Commission, and Morris Goldstein at the Peterson Institute for International Economics provided comments. (The assistance of external reviewers implies no responsibility for the final product, which rests solely with CBO.) Leah Mazade edited the paper, and Sherry Snyder proofread it. Maureen Costantino designed the cover and prepared the paper for publication. Lenny Skutnik printed copies of the paper, Linda Schimmel handled the print distribution, and Simone Thomas produced the electronic version for CBO’s Web site (www.cbo.gov).…
The main cost an undervalued yuan imposes on the Chinese economy is that foreign trading partners such as the…