Before the rise of communism in China, the Country was a world power, a nation strong enough to influence events throughout the rest of the world. They were also isolationists, abstaining from political or economic relations with other countries. Due to their isolation, there was a drastic decline in China’s power. In 1920, when China became a communist government, they became more open to trade. As of today, one of their biggest trading partners is the United States. At this time, the U.S. exported $69.6 billion in goods and services to China (about the same as 2008), while it imported over $296 billion, down significantly from 2008. We call this a trade deficit; an excess of imports over exports. This is a concern for many Americans today, because some think that the United States is investing too much money in China and need to stop trade. I believe that trade with China is definitely a good thing, with caution. If the unevenness of trade continues, the U.S is going to lose money, while China on the other hand, takes in a lot. It’s important that the U.S balances out their imports and exports, to continue trade with this foreign Country. As of 2009, the U.S trade deficit with China was $227 billion. There is a trade deficit with China because the Country is able to produce low-cost goods that Americans want. They are able to produce these goods, mainly because in China there is a lower standard of living. This makes it easier to pay workers a lower wage. Also, China has an exchange rate that is moderately set to be always priced lower than the dollar.
The U.S. trade deficit with China is impacting the U.S economy greatly, and injuring U.S. workers. Companies can't compete with cheap Chinese goods, so they have to either lower their costs or go out of business. To lower their costs, many companies have started outsourcing to India and China, adding to U.S. unemployment. This has caused deterioration in the trade balance (the difference between exports,...
Please join StudyMode to read the full document