...Exploring the prospects for U.S-China trade With the significant development of economy, China has already exceeded Japan, becoming the second largest economic entity in the world. From 1949 to the present, China's economy grew annually from 4 to 10 percent. There is no doubt that the export contributes a lot to China’s GDP; meanwhile, United States just replaced the European Union, turning into China’s largest trade partner last year. It is obvious that China and U.S. are closely connected in the modern economy. Since U.S. and China are inextricably linked, I would like to analyze the trade between U.S. and China in this paper, and find out what are influencing the value of trade between the two countries. First of all, there are some economic concepts that need to be explained. China has a favourable balance of trade, which means nowadays China exports more than imports; however, U.S. has run a trade deficit every year for more than thirty years, which means U.S. imports more. The import and export are always connected with the exchange rate. For instance, if you are exporting and your local currency becomes strong then your products become more expensive for your buyers. If you are importing and your local currency becomes weak then the products you are importing become more expensive. As we can see, China is exporting more to the U.S., so I would assume that one of the reason why U.S. would import more from China may be the exchange rate of China’s currency Yuan is slumping;...
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...China and the Yuan-Dollar Exchange Rate Q1) How credible was China’s announcement to let the yuan float? Chinese Yuan/US Dollar Exchange Rate Index, July 2005-Nov 2011 Chinese government has declared its intention to let the yuan float on 19th June of 2010, and this will most likely result in the Yuan to appreciate as the Yuan is under-valued. This reform was of the Renminbi (RMB) exchange rate regime was to enhance its exchange rate flexibility. This announcement may seems dubious because China has long adopted a fixed exchange rate regime since 1994 in which the Chinese government has maintained a policy of intervening in currency markets to limit or halt the appreciation of its currency, the RMB, against the U.S. dollar and other currencies. Known as the world’s manufacturing factory, keeping such a policy will definitely make its exports relatively and comparably cheaper to other countries, especially United States. Similarly, this will also make U.S. exports to China much more expensive, than would occur under free market conditions. As such, if China allows its yuan to float and appreciate, it may lose its competitive position as it may suffer a loss in sales of its exports due to its goods being relatively more expensive to foreign buyers. China’s announcement to let its yuan appreciate was credible because earlier on, the yuan actually appreciated 17.5 percent the U.S. dollar between July 21 2005 to July 21, 2008. In July 21, 2008 China has stopped its Yuan appreciation...
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...Panama Canal increased the exports of lumber from British Columbia to eastern U.S. markets, which dramatically increased the netbacks received for lumber produced in British Columbia (Statistics, Canada, 2012). Post world war, rapid expansion in the US industrial capacity was accompanied with rapid growth in the Canadian economy as well. Growth in the demand for newspapers led to the growth of pulp and paper industry. By1950, over half of the world’s newsprint was supplied by Canada. By 1954, pulp and paper exports accounted for 24% of Canada’s total exports, of which, 33% of those exports were to the United States (Statistics, Canada, 2012). Post 1960, the new staple in the resource landscape for Canada was Energy. Until this time, though some local sources were available on the Prairies and in Nova Scotia, Canada had relied on coal imports. In 1957, there was a major oil discovery in Alberta at Leduc, which lead to a major and dramatic expansion of crude oil and natural gas industry, the effects of which are still evident till date. The North American Free Trade Agreement (NAFTA) removed most of the trade barriers for Canadian producers in US markets. Between 1990 and 2000, the export volumes of forest products increased at a compound annual rate of 4.4%, more than doubling the growth in forest products exports. The forest product export prices also rose at a compound annual rate of 3.2% per year, which outpaced the 2.3% compound annual growth in export goods prices (Statistics...
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...unemployment figure is currently 8.2 percent. Many economists estimate the rate at which the economy is considered to be at full employment to be about 4 percent, because even under the best conditions there will be individuals seeking jobs. Certainly full employment is desirable, but under our current policies it would do little to create any long-term prosperity for the United States. Our trade deficit was over $500 billion last year, but at full employment it is estimated that we would have a trade deficit of $750 billion or more. As more Americans get jobs, they have more purchasing power. Unfortunately many of the items Americans purchase are now made overseas, which sends American dollars overseas instead of keeping them here in the U.S. The money has to come from somewhere when we purchase more than we sell, and this leads to debt. That debt can either come in the form of public debt or private debt, but both can be damaging. Many Americans, both conservative and liberal, are very concerned with the rising...
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...ECO/372 Week5 December 1st, 2013 Eduardo V. Delacruz, MBA International Trade and Finance Speech What happens when there is a surplus of imports into the U S? A surplus of imports is good for consumers but bad for local business. We have to produce and manufacture in order to export. As our export trade shrinks, so does our workforce and economy. The surplus of imported cars for 2012 has exceeded the exportation by $152 billion. Also the shelf life of cars is 1 year. Every year at the end of the cycle the existing models are sold off at huge discounts to make room for the new models, which is good for the consumer. What are the effects of international trade to GDP, domestic markets, and university students? International trade comprises exports and imports, the net result of which affects our GDP. Since our imports exceed our exports, our GDP would be impacted by our net exports or deficits. “The rippling effect of financing deficits is an increase in interest rates from selling bonds that reduces investments and growth. This further reduces GDP” (Colander. 2010). Domestic markets flourish when there is a demand for local products overseas. If the domestic markets have to compete with imported products it could be a struggle. However jobs can be created for the advertising, sales, and distribution of foreign imports. The effect of international trade on university students has recently brought about an awareness of a vibrant industry in the education...
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...March 4, 2011 Abstract This essay contains the international trade between Canada to U.S. and Canada to China including the foreign exchange policy in each country and comparative advantages. It mostly focused on U.S and China between Canada’s relationships. The United States and China are the largest economic market in the world. Also these countries are Canada’s most favor relationship in the international market. In 2009, the international financial crisis became a huge issue of the world. Due to this financial crisis U.S got a lot of damage. It made also Canada’s economic downturn, because of strong reliant on U.S. Over view, Canada has to be a stronger country with more powers, in order to maintain a good relationship with many other countries to help each other and have more successful economic growth. GLOBAL ECONOMIV DOWNTURN FROM THE FINANCIAL CRISIS In 2009, there was a global economic downturn from the financial crisis. Because of this, many countries got a lot of money damages. This put the world economic in most hard situation. Most of the people in the world spent such a hard time in this area. The main sources of this happened from some countries which were largest markets in the world such as the United State and other developed countries. From this economic downturn many developed countries reduced imports from other countries. Therefore a lot of export countries got more economic downturn. The one of main reason of the financial crisis was...
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...Period 2011 : 1] China 2] India 3] USA Team Members and Students IDS : Nikita Bhivate A2604 ( U.S.A.) Li Jianwei A2394 ( China ) Tingting Hao A2319 ( India ) MBA 531 International Financial Management. Prof. Jayant Kanitkar. INTRODUCTION : Introduction Of China : During the period from 2007 to 2011, the whole world has been suffering from global economic recession and financial crisis. From US subprime to EU sovereign debt crisis, China, as the second largest economy in the world, experienced internal and external economic impacts. In the year of 2007, China’s economic development reached its pick. With the expectation of CNY appreciation, hot money flooded into China. As a result of this, the price of investment asset surged up sharply. The housing price tripled, and the Shanghai stock index reached to a historical level of 6300 from less than 3000 with in one year. The wealth effect from the high investment asset price stimulated consumption. Moreover, China was keeping its high net exports trading volume and fixed asset investment. The GDP growth rate exceeded 10%. However, the financial bubble broke in the US, and a chain reaction directly affected China. In 2008, all economic indictors shown that China’s development slowed down. Stock market can be regarded as the forecaster of economic. The Shanghai stock index dropped to 1900 from 6300. Affected by recession in international trading partners, the export also decreased sharply...
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...around the world. Global trade involves the export and import of goods and services between countries. Goods and services that enter into a country for sale are called imports and goods and services that goes out of a country is call export. Some countries have an advantage and disadvantage on their goods and services. The exchange rates can effects the value of imports and exports. Comparing China and Russia, China has lower labor cost and they have more people in their country. But 58% of Russia exports is oil and oil based products. If the global trade did not exist, it would do a lot of damage to the today’s economy. The Importance of Global Trade Global trade is very important in the economy because it benefits to all the countries and it also create peace between nations. Global trade is simply the exchange of goods and services between countries around the world. No one knows when did global trade started but many countries have been exchanging goods for hundreds of years. Global trade involves the export and import of goods and services across the international boundaries. Goods and services that enter into a country from another country for sale are called imports and goods and services that goes out of a country to another country are called exports. Dating back to about three thousand years ago, Silk Road and Niles River played a big role in trading goods and services because people used these routes to import and export goods to other countries and make treaties...
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...What was the impact of China’s exchange rate policy on doing business with and “against” China? The Yuan(RMB) is loosely pegged to the U.S dollar, although China claims that its currency value is managed against a basket of currencies. China has been accused of illegally keeping the Yuan fixed against the U.S dollar. By keeping their exchange rate low, in particular against European currencies, some argue that China gained an unfair competitive advantage in trade. Between 1978 and 2004, GDP in china grew at an average 9.5 % annual rate, FDI increased from zero to $64 billion annually, and trade increased from 10% of GDP to 79% of GDP. U.S imports from china has increased significantly, while manufacturing jobs in the U.S has declined. For example, the case study” China: to float or not to float? (A)” mentions that because of china’s exchange rate policy the U.S had to close 18 textile plants, which created a loss of 16,000 jobs. People tend to believe that China’s growth is taking place at the expense of its many trading partners. Politicians ignore the fact that it is often FDI and foreign companies that are booming the Chinese export locomotive. The truth is that China’s rapid export growth also has a positive impact in East Asian countries. China is the largest importer of South Korean and Taiwanese and it also imports a substantial amount of goods from Japan. Despite the fact that exports of other Asian countries to the U.S decreased, the total exports as been growing...
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...Maria Tovar Trade Surplus and Trade Deficit China overtakes USA as worlds trading partner China´s Trade Surplus Vs. USA´s Trade Deficit Countries that have open economies are those who carry out economic activities with other countries and trade goods and services. Countries can export, which means selling domestic goods and services to another country or they can import, which means buying goods and services from another country. An economic surplus makes reference to having a positive balance of trade; when a country´s exports exceed its imports. On the other hand, a trade deficit is when a country´s imports exceed its exports and has a negative commercial balance. As the video: “China overtakes USA as a world´s trading partner,” suggests, China currently has a trade surplus. Between 2000-2008 China´s imports have grown 403% whilst its exports have grown 474%. China´s exports are currently higher than its exports due to its economic strategy, which will be explained below. The video explains why China has overtaken the US as world´s trading partner, and thus why China has a trade surplus and the US a trade deficit. American and many other companies are now producing and assembling their products in China due to the low manufacturing costs in this country. It is more profitable for American companies to produce and assemble their products in China not only for the low labor costs, but also for the low transport costs. Even though this harms the US´s economy, companies...
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...evening Ladies and gentlemen of the press; this evening I will define what economics is and when there is a surplus of imports brought into the U.S, The effects of international trade to Gross Domestic Product (GDP), domestic markets and university students, Government choices in regards to tariffs and quotas affect international relations and trade, What are foreign exchange rates, How are they determined, Why doesn’t the U.S. simply restrict all goods coming in from China, and final Why can’t the U.S. just minimize the amount of imports coming in from all other countries. The economics is the study of how people choose to use resources. Resources are considered as time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to gather them to create useful products and services. The choices that are more important are how much time to devote to work, to school, and time to relax or spend with family. Also what are important are how many money to spend and how much to save, how to put together resources to produce goods and services, and how to vote and shape the level of taxes and the role of government. When a surplus of imports brought into the United State the surplus and deficit in the trading community must stay at a balance. When an import surplus accorder it makes a trade deficit because the country is use up more than it produces and exports. For example this is shown in the oil companies. When the United States...
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...ago, China was said to be the most advanced nation in the world. Today, they are still much more advance than most of the countries. China was named by Europeans after the ancient Ch’in Dynasty of the third Century B.C. China continues to be the oldest civilization in the world today. China was the only from the world’s great civilizations to evolve from nearly total isolation from the rest of the world. The primarily result of this was geography: the sea to the east, the Himalayas to the south, the Gobi desert to the north and inhospitable deserts and high plateaus to the west. The Yellow river in China is said to be the source of the first Chinese culture and civilization. There are many different cultures located in China such as the Yangshao culture, Hongshan culture, and Yunnan culture. Ancient Chinese agrarian religion revolved around the worship of natural forces and spirits who controlled the elements and presided over rivers, fields and mountains. Shaman known as wu acted as intermediaries between the human and spiritual worlds and performed rites to insure good weather and harvests and keep evil spirits at bay. Even though China is regarded officially as an atheist state today, it has had an officially recognized religion since 2356 B.C., when science, religion, mythology and government were all linked together. Taoism and Confucianism began to take shape around the 5th and 6th centuries B.C. but evolved from religions that had been around in China for...
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...was at the peak of its power. But when the U.S.-China Economic & Security Review Commission, a congressionally appointed panel, convened there on Sept. 23, it was not to discuss power but decline. One after another, economists, union officials, and small manufacturers took the microphone to describe the devastation Chinese competitors are inflicting on U.S. industries, from kitchenware and car tires to electronic circuit boards. These aren't stories of mundane sunset industries equipped with antiquated technology. David W. Johnson, CEO of 92-year-old Summitville Tiles Inc. in Summitville, Ohio, described how imports forced him to shut a state-of-the-art, $120 million tilemaking plant four football fields long, sending Summitville into Chapter 11 bankruptcy protection. Now, a tenfold surge in high-quality Chinese imports at "below our manufacturing costs" threatens to polish Summitville off. Makers of precision machine tools and plastic molds -- essential supports of America's industrial architecture -- told how their business has shrunk as home-appliance makers have shifted manufacturing from Ohio to China. Despite buying the best computer-controlled gear, Douglas S. Bartlett reported that at his Cary (Ill.)-based Bartlett Manufacturing Co., a maker of high-end circuit boards for aerospace and automotive customers, sales are half the late-1990s level and the workforce is one-third smaller. He waved a board Bartlett makes for a U.S. Navy submarine-detection device. His buyer...
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...value of the yuan against the U.S. dollar? What were the benefits of doing this for China? What were the costs? The U.S. dollar was the strongest in the global market. The benefits for China were that their yuan would stay weak, their exports would remain cheap, and their economy would thrive on production for the U.S. economy. The costs for China were that they had to exchange for U.S. dollars every month and that their exchange was the U.S. deficit. Over the last decade, many foreign firms have invested in China and used their Chinese factories to produce goods for export. If the yuan is allowed to float freely against the U.S. dollar on the foreign exchange markets and appreciates in value, how might this affect the fortunes of those enterprises? The enterprises would have to pay the factory workers more money. It might not be worth exporting the labor. How might a decision to let the yuan float freely affect future foreign direct investment flows into China? China’s FDI would suffer because countries would no longer hire out China’s laborers. China would lose working contracts because country’s domestic labor would become more economical. Under what circumstances might a decision to let the yuan float freely destabilize the Chinese economy? What might the global implications of this be? The whole idea of keeping the yuan low in value on the global market is so that countries would buy China’s exports. This kept the Chinese economy...
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