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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 triples!


First step to a level playing field:




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