Political Economy Week: Political Transitions and American Sino Relations Nov 6, 2012
Political Transitions and American Sino Relations
This presentation talked about America's complicated relationship with China. On one hand, the United states Federal Government has borrowed an exorbitant amount of money from China that has helped to keep the economy stable for the most part. And on the other hand, there is a fear that China will someday over power the United States because of their growing economy and their interest in purchasing American Treasury Bonds. It is the politicians in the United States that examine our relationship with China and determine our course of action. It is important for them to decide carefully, because the prosperous future of the US relies on our ability to have a good relationship with China. During this presentation, Instructor Myers talked about the large trade gap between China and the United States. The US imports about 4 times as many goods from China as we export to them. Which means that we buy a lot more from them than they buy from us. The reason we purchase so many goods from China probably has a lot to do with currency manipulation. Because China has a communist government, it has the ability to deflate the value of Chinese currency. Making it so it takes more Chinese currency to equal one American dollar. This makes it difficult for people in China to buy goods from other countries, because things are too expensive. But makes buying goods from China easier and less expensive for other countries like the US. And that means more foreign exchange for China which is good for their economic growth. From this presentation, I learned how important America's relationship to China is to the stability of our economy. I also learned the meaning of currency manipulation. I've heard this word used by politicians but never really understood how a deflated currency could effect foreign trade.