Evaluate the Role and Influence of China on International Trade

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Evaluate the role and influence of china in international trade. International trade is exchange of capital, goods, and services across international borders or territories. It refers to one country exporting goods and services to another country. The balance of trade represents the value of exports produced by a country less the value of imports purchased by a country. In China’s case, the balance of trade was a surplus of circa 25 billion dollars in December 2010.This shows that China’s exports of goods and services are hugely in excess of imports. Exports of goods and services constitute 39.7% of GDP and this signifies that china’s economy is hugely dependent on international trade. China is the main exporter, globally, of : office machines, telecommunications equipment, electrical machinery and apparel and clothing. China’s main imports include commodities such as: iron and steel, oil and mineral fuels; machinery and equipment, plastics, optical and medical equipment and organic chemicals. The USA as of January 2011 has a trade deficit of $46.3 billion with China. This is primarily due to the fact that Chinese products are extremely price competitive causing US consumers to import more than US producers export. The reason China is extremely price competitive is because China’s price of labour is comparatively much lower than the USA and this lowers the cost of production. As a result, Chinese producers can lower the prices of their products in order to increase competitiveness and maximise consumption as in the USA’s case. Another significant factor contributing to the high price competitiveness of Chinese products is the state pegging the renmimbi to the dollar. By maintaining a devalued renmimbi in comparison to other nations, China makes the price of its produce lower in terms of other countries. The benefits of China supplying the rest of the world with cheaper products are the lower imported inflationary pressures incurred by the consumers...
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