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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (553)	8/28/2003 12:42:14 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

At issue: Trade deficits with China Bruce Bartlett (archive) August 28, 2003 \| Print \| Send The rapidly rising U.S. trade deficit with China is quickly becoming a political issue. Many members of Congress are warning that China needs to take action, such as raising its exchange rate, to deal with this problem before it leads to protectionist legislation. A closer examination of the Chinese trade problem, however, suggests that there is less here than meets the eye. In a very short time, Chinese goods have become the largest component of America's trade deficit. From virtually nothing in the 1980s, our trade deficit with China jumped to $103 billion last year. We exported just $22 billion worth of goods to China while importing $125 billion. By contrast, our trade deficit with Japan last year was 30 percent lower than that with China. It is important to put these numbers in perspective. Although China represented 22 percent of the U.S. trade deficit last year, that is down from 27.5 percent in 1997. Also, China runs a trade deficit with the rest of the world. In 2001, China's total surplus was $33 billion while its surplus with the United States was $83 billion. Among those countries running surpluses with China are Taiwan ($25 billion) and Korea ($11 billion). This suggests that China is not running a trade policy aimed at subsidizing exports or keeping out imports; otherwise, it would be running a surplus with everyone. As a recent Federal Reserve Bank of Cleveland study concluded, "China has the largest surplus of any country in its bilateral trade with the United States, not because its market is closed but largely because it has emerged as a major global production base for labor-intensive manufactured goods." townhall.com