U.S.-China Trade History 1980-Present
U.S.-China relations became a breakthrough in history in 1979 when both countries came together and diplomatically ensued a positive political and economic future. A small but well beginning started in 1980 when U.S.-China trade was $2 billion, which was the summation of both imports and exports. At the time China was the United States’ 48th largest source of imports and 23rd largest export market. U.S.-China trade in the past 30 years has dramatically increased ever since. U.S.-China trade in 1981 rose from $5 billion to $503 billion in 2011. As of now China is the United States’ second biggest trading partner (behind Canada), third biggest export market (Canada being first, Mexico second), and number one source of imports. In 1985 the U.S. trade deficit with China was $0 billion with U.S. imports equaling U.S. exports to China. Being that U.S. imports from China are higher and are now increasing more than U.S. exports to China; the U.S. merchandise trade deficit has risen from $10 billion in 1990 to $296 billion in 2011. Today China currently now owns the title of having the single highest U.S. trade balance deficit (with the combined world economy leading ahead China). With OPEC (Organization of Petroleum Exporting Countries) being second the highest, and the European Union with its 27 members being third; their combined U.S. trade balance deficit being $237.8 billion is still no match for China’s nearly $296 billion in today’s economy. China is trading more than ever and has become a big player in the global export market. At their peak of economic growth, cheap labor is their primitive and the key to what makes their exports so attractive to foreigners. The United States, once the world’s leader of exports is now the third largest global exporter following behind Germany and China. The United States and other advanced countries are now struggling to compete with China and those other developing nations who utilize their low wage comparative advantage in manufacturing. From what looked like an unpredictable beginning for the United States and China now appears to be an economic complexity for both parties and the global economy. Beneficiaries of U.S.-China Current and Potential Trade
As China’s rapidly economy grows, the standard of living of its people idealistically will too. With a determined future full of growth China is aiming to modernize and innovate itself as an advanced nation. According to the Boeing Corporation “Boeing Corporation predicts that over the next 20 years (2011-2030), China will buy 5,000 new commercial airplanes valued at $600 billion and will be Boeing’s largest commercial airplane customer outside the United States”. Besides purchasing American prestige airlines, China will also have to improve its infrastructure. In the process it must buy raw materials from the global market in order to build new roads, buildings, and etc. New homes will be built along with suburban neighborhoods filled with middle income citizens. Their demand for home appliances and personal entities will increase private consumption among the population. According to a report by the Boston Consulting Group, “in 2009, China had 148 million middle class and affluent consumers, defined as those whose annual household income was 60,000 RMB ($9,160) or higher, and that level is projected to rise to 415 million by 2020”. The rise in China’s middle class will be a targeted market for American companies thus creating future export opportunities for the United States. As stated on the GM website “For the first time in its history, General Motors (GM) in 2010 sold more cars and trucks in China (at 2.35 million units) than it did in the United States (2.21 million units). In 2011, GM sold 2.55 million vehicles in China (up 8.3% over 2010 levels) versus 2.50 million in the United States. GM in China currently has 11 joint ventures and two wholly owned foreign enterprises and...
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