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The United States and China: A GrowingTrade Imbalance

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Between 1949 and 1972, there was no trade between the United States and Mao’s Communist China. In late 70s, China went through economic reforms and global trade increase ten times. Since the late 80s, United States has had a bilateral trade deficit with China; annual deficits increase throughout the 90s, and increase rapidly in the first half of the 21st century (C. Fred Bergsten,Bates Gill, Nicholas R. Lardy, Derek J. Mitchell, 2006). At the beginning of 2008, America and China are each other’s second largest trading partner, while China has replaced Canada as the largest exporter to the United States. Today trade deficit with China is 28 times larger than it was during the Reagan era, according to new figures released by the U.S. Census Bureau. That daunting deficit has grown by 18 percent per year since China first entered the World Trade Organization in 2001. Census figures show $91.9 billion in U.S. exports to China during 2010, and $364.9 billion in imports, a stunning $273 billion difference (2011). Many of us wonder if economic relationship and trade with China is for United States threat or continuing challenges and opportunities. Why we have so huge trade imbalance? What is causing it? Some of the most common explanations are: China restricts access to its market, China’s low-wage/low-cost advantage, and China’s undervalued currency. Although China did impose quotas and licensing requirements on many goods when it first opened itself to world trade in the 80s, the Chinese government had, by 2005, eliminated most import quotas, as per the terms of accession to the World Trade Organization in 2001. Agricultural products were exempt until 2007. Although China still has some import tariffs, they are relati... ... middle of paper ... ...ell. (2006). China: What the World Needs to Know Now about the Emerging Superpower. New York: PublicAffairs. Koprowski, G. J. (2012, 02 10). US-China trade deficit now largest in world history. Daily Caller. Retrieved from http://dailycaller.com OECD. (2006). China will become world’s second highest investor in R&D by end of 2006, finds OECD. Retrieved March 09, 2012, from OECD: www.oecd.org Preeg, E. H. (2011). Growing U.S. Trade Deficit in Manufactures Raises Questions. Arlington: MAPI. Retrieved March 09, 2012 Steinfeld, E. S. (2010). Playing Our Game. New York: Oxford University Press, Inc. USCBC. (2011). Growth in US Exports Top 10 Markets 2000-10. Retrieved from The US-China Business Council: www.uschina.org Wayne M. Morrison, Marc Labonte. (2008). China’s Currency: Economic Issues. Retrieved March 9, 2012, from http://www.fas.org/sgp/crs/row/RL32165.pdf
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