The United States and China: A GrowingTrade Imbalance

The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades. China’s economical strength comes from its international trades as the economy has grown to a rate of 10.3% in 2010. It has become the world’s largest exporter in the global economy.

By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s biggest opponent in economic field. Some economists even say that in 10 years, China will be the same size as the US economy. No matter whether China is going to reach the US’s economy size in 10 years or not, after forty years since the US first opened trade with China in 1972, America’s economy gradually relies on China’s economy and will collapse without the strength of China’s market.

ARE THE FORCES THAT INFLUENCE CHINA’S TRADE SURPLUS OVER U.S. ACTUALLY GOOD FOR BOTH COUNTRIES? INTRODUCTION Over the last two decades, China has been increasing its trade surplus. To run into a surplus mean that the amount of goods a country exports is far less than its imports. According to the World Bank (2010), China reported a surplus in the balance of trade equivalent to $US 1.7 Billion in April of 2010. Furthermore, before the financial crisis, the Chinese economy had a record from 2006 to 2008 with the fastest-rising Gross Domestic Product (GDP) in 11 years.

China's Great Economic Transformation (507-568). New York: Cambridge University Press. Coates, B., Horton, D., & McNamee, L. (2014, January 1). CHINA: PROSPECTS FOR EXPORT-DRIVEN GROWTH. Economic Roundup Issue 4.

INTERNET TECHNOLOGY DEVELOPMENT BOOST CHINA FURTHER A perspective look at the country¡¦s transition in next decade relative to internet technology Bo Li, School of Technology & Management Submit to: Mr. Paul Reynolds INTRODUCTION Since 1980 China¡¦s economy has grown by more than 9 percent a year. The country now manufactures 75 percent of the world¡¦s toys, 58 percent of the cloths, and 29 percent of the mobile phones. More than $1 billion in foreign direct investment arrives each week. By 2008 China will be the world¡¦s third largest exporter, and by the decade¡¦s end its economy will be larger than that of either France or United Kingdom (Emmanuel, et al., 2004). China¡¦s GDP in 2004 growth by 9.5 percent to ¢G851,072 million and IT(information technology)¡¦s contributions account for 25 percent.

Since the early 1980s, China has been undergoing a dramatic economic growth through the reform and opening-market policy. China’s economy acquired an outstanding achievement, precisely, it had kept a continuous annual growth rate exceeding 9% for 30 years (Zhang et al., 2012: 393). Moreover, China overtook Japan to become the second largest economy by measuring Purchasing Power Parity by the end of 2010 (Yao and Zhang, 2011: 206). However, in the meantime, during the period of transition of the Chinese economy, it appears a fact that countering the traditional finance-growth theory and research literature, specifically, a rapid economic growth with a low efficiency financial system. This essay will argue that poor financial system can promote speedy economic growth in China that differs from common findings in the empirical literature.

The imbalance has been rose every year henceforth China became the member of the World Trade Organization (WTO) in 2001, the Chinese economy was growing by 18% each year when the US below 3%. Confronting the trade imbalance with a developing country is not the first time for the US. As the precedent, American consumable market was the driving force of the Japanese econo... ... middle of paper ... ...ney-and-banking/china-us-debt-situation/v/china-buys-us-bonds>. Henry, Grabar. "Buy a House, Get a Visa: Coming Soon Everywhere."

Politicians have claimed that the budget deficit is decreasing. However, history is showing us an entirely different story. The Treasury Department’s figures show the total outstanding debt on September 30th 2001 was almost six trillion. Ten years later, the debt has increased to almost nine trillion dollars. That is an overwhelming increase of over three trillion dollars.

Furthermore, the July US trade deficit with China set another monthly record at $14.9 billion as imports increased 3.7% from June and exports fell 2.6%. US manufacturers and politician still blamed China’s policy of pegging its currency against the US dollar for the soaring bilateral deficit.

In addition, their stocks grow an average of 7% each year (Rapoza). Though experts have expected the economy to crash for the past twenty years, they continue to be proven wrong each year. China is now a major manufacturer, and produces enormous quantities of products ranging from cement and flat glass, to aluminum and automobiles. If one looks around one’s house, one will find most items possess a “made in China” label. Many nations rely on China for everyday goods, and import finished products by the millions.