Trade Imbalance between the United States and China
Team 1 Assignment 11.1 Explanatory Case
Explanatory Case: Trade Imbalance between the United States and China
John Baltz, Jessica Christensen, Delisa Fields, Keisha Gill, & Timothy Glover
MBA608-T301 Capitalism & Economic Reasoning
Professor Robert Guida
Abstract
In spite of Ricardo’s Theory of Competitive Advantage, which states that countries would benefit from trading regardless of whether they have high or low labor wages, the balance of trade in goods between the United States and China seems to disproportionately favor China. This paper will present a brief history as well as current statuses of trade relations between the U.S and China, as well as looking at reasons the U.S. might use to rationalize or justify a trade imbalance that favors China.
Problem Statement
In spite of Ricardo’s Theory of Comparative Advantage, stating that countries would benefit from trading regardless of whether they have high or low labor wages, the balance of trade in goods between the United States and China disproportionately favors China.
Introduction, Background, and History
In 1949, the outbreak of the Korean War led to a trade embargo against China by the United States (Ben)]. It took more than two decades later for the United States to discuss business with China once again. Once the talks of business took place, the United States began to do some business with China. However, very little business was happening between the two countries. The US-China Business Council was formed so that the relationship between the two would progress into something bigger and better. When the countries started to do business with each other again in 1973, China really did not want to trade with the United States because it wanted to stand on its own two feet.
In a way they were like how we are today when it comes to buying products from different countries. China was not keen on buying products with American labels on them. They were not a fan of foreign products.
Explanatory Case: Trade Imbalance between the United States and China
John Baltz, Jessica Christensen, Delisa Fields, Keisha Gill, & Timothy Glover
MBA608-T301 Capitalism & Economic Reasoning
Professor Robert Guida
Abstract
In spite of Ricardo’s Theory of Competitive Advantage, which states that countries would benefit from trading regardless of whether they have high or low labor wages, the balance of trade in goods between the United States and China seems to disproportionately favor China. This paper will present a brief history as well as current statuses of trade relations between the U.S and China, as well as looking at reasons the U.S. might use to rationalize or justify a trade imbalance that favors China.
Problem Statement
In spite of Ricardo’s Theory of Comparative Advantage, stating that countries would benefit from trading regardless of whether they have high or low labor wages, the balance of trade in goods between the United States and China disproportionately favors China.
Introduction, Background, and History
In 1949, the outbreak of the Korean War led to a trade embargo against China by the United States (Ben)]. It took more than two decades later for the United States to discuss business with China once again. Once the talks of business took place, the United States began to do some business with China. However, very little business was happening between the two countries. The US-China Business Council was formed so that the relationship between the two would progress into something bigger and better. When the countries started to do business with each other again in 1973, China really did not want to trade with the United States because it wanted to stand on its own two feet.
In a way they were like how we are today when it comes to buying products from different countries. China was not keen on buying products with American labels on them. They were not a fan of foreign products.
References: Amadeo, K. (n.d.). The Real Reason We 're Sending American Jobs to China. (n.d.). Retrieved November 8, 2014, from http://useconomy.about.com/od/tradepolicy/p/us-china-trade.htm Ben, B British and American Exports: A Study Suggested by the Theory of Comparative Costs. Part I Author(s): G. D. A. MacDougall Source: The Economic Journal, Vol. 61, No. 244 (Dec., 1951), pp. 697-724 Dickie, M Krugman, P. (1994), "Does Third World growth hurt First World prosperity?", Harvard Business Review , July. Ricardo (1817). On the Principles of Political Economy and Taxation. London, Chapter 7 World Policy Institute Zhou, J. (2008). Does China’s Rise Threaten the United States? Asian Perspective, 32(3), 171-182,4. Retrieved from http://ezproxy.bellevue.edu:80/login?url=http://search.proquest.com/docview/215884941?accountid=28125