Some China Trade Notes…
It’s hard to believe that in
1985, trade in goods between the US and China was basically balanced; we
imported about the same value of goods from China as we exported to China –
about $3.9b. In the just-over 20
year since, our export to China have increase 14x (see the little blue bars on
the graph), while our imports from China have increase 75x!
This graph was done using
data from the Census Bureau, and the data can be found at http://www.census.gov/foreign-trade/balance/c5700.html
For 2007, to July, the trade
in goods deficit with China was running about 17% over 2006, so we’re on track
to have a $270 billion trade deficit with China in 2007.
I kind of visualize it as if
there were convoys of ships bringing $270 billion of toys, shoes, mp3 players
and LCD TVs, and once they dropped off their cargo, they just turned around and
went back to China with their holds full of money.
What does it mean? For one thing, it means that
eventually, all that money will “come home to roost”. The BBC estimates that
China hold $700 billion in US government bonds (http://news.bbc.co.uk/1/hi/business/6106280.stm). They are basically bank-rolling our
current fiscal deficits.
The trade imbalance also
seems to suggest that free trade is a bit one-directional, at least as relates
to China-US trade. From Jan 31,
2007 to Oct 4, 2007, the Euro has appreciated 9% against the US dollar. The Chinese Yuan? A meager 3.6% (data
from www.OANDA.com). This is story from the Washington Post
provides a bit of a picture of the efforts our government is making to get
China to liberalize its currency:
Trade is probably the most
powerful economic force there is – it was trade that helped turn post-war Japan
into an economic powerhouse, that helped Korea move into the first world, and
that is quickly propelling Brazil into one of the 10 largest economies in the
world. The difference between
those countries and China? Well,
for starters, those countries are all democracies. Those countries also respect freedom of religion, protect
the rights of children, and allow free press and free movement of people.
Here are other China-trade
links to look at:
For the environmentalists:
Yikes! China’s trade surplus
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