Trade

One of the largest communicational issues between China and the United States is due to the severe lack of transparency, creating enormous trust issues which has fueled national differences. A few of the ways that lack of trust has proven to be detrimental to China and U.S. affairs is analyzed in Kenneth Lieberthal and Wang Jishi’s, Addressing U.S.-China Strategic Distrust. It states, “China views the U.S. as taking advantage of the dollar as the reserve currency and adoption various projectionist measure to disadvantage the People’s Republic of China (PRC) economically”. Additionally, the United States disapproves of China’s mercantilist policies because they fear it will cause their efforts in economic recovery

For the last twenty eight years, China has been quickly growing into one of the largest economies in the world. China has accomplished this feat, in part, by radically changing their policies on trade and free market interactions with other countries. During this process, China has bought approximately one hundred trillion dollars of United States debt in the form of Treasury bills, notes, bonds, and Inflation Protected Securities (Amadeo). This debt has given China leverage against the United States which has enabled China to keep the value of the United States dollar high, while keeping the value of the Chinese yuan low. As the inflation of the dollar continues to negatively affect the

China has seen massive economic growth in the past few decades. Since its reopening in the 1970s, the country has begun trading and buying foreign currencies with western nations like the United States. When the housing crisis which began to unravel in 2007 really hit the American economy hard, China was more than happy to step in and put up funding to help keep the American economy, one of its biggest customers, in a delicate balance. Unfortunately, the American economy has been incredibly slow to recover from the last major recession. As such, it has increased its dependence on Chinese funding to back American debt.

Which goes back on how the dollar is back up. Another deal that countries see is that they can also exchange the Yuan which they have, to the federal banks of China into gold since their money is control in a gold standard economy.

The combination of increasing unemployment rate and food price created severe poverty across the nation (Goldfinger par. 1-3). The currencies in China, too, went through a lot of changes to accommodate the increasing trade. At first, the silver Spanish dollars became rare and increased in value so much that it was outlawed as a usable currency. However, at the same time, the Chinese copper currency were also being used less due to the fact that the metal was becoming rare and the administration of the currency was extremely poor. The Mexican dollar was introduced but the problem was not solved until paper money were used in 1853 (Goldfinger par. 2). To make the economy worse, during the First Opium War, China had to pay six million silver dollars to ransom Canton, and an additional nine million dollars were paid to foreigner traders for their loss. Later, twelve million taels of silver were paid to Britain and France under the treaties negotiated after the Second Opium War. All of those factors weakened the Chinese economy in the 1800s (Allingham par.5-9). However, the Opium Wars’ impact is everlasting, for “the Chinese have embarked on a long and arduous struggle to expunge the humiliations which they suffered during and since the Opium War…Foreign industrialists may continue to dream of the supposedly unlimited China market, but the Chinese…are determined to keep the 'open door' sufficiently ajar to import vital technologies, while keeping all unwanted

The United States and China Relation started since 1784, but it wasn’t until 1970’s when The United States finally recognize the communist people from China. This led us to be influenced by their culture, politics, but the most important economically. The relation of these two countries was not so good at the beginning, since China is a communist country that was involved with many countries that were in war. The interaction of these countries goes back to 1785 when the first Chinese sailors arrived to Baltimore looking for wealth and then it increases in 1847 with the Gold Rush in San Francisco that attracted many Asian Immigrants in look for new opportunities. The U.S. Department of State mentions in their archive United States Relations

Third, Chinese currency appreciation makes Chinese products more expensive to developed countries. In 1994, the dollar-to-yuan exchange rate for was 8.7, and 18 years later, the rate has decreased to 6.3, which means Americans have to pay 28% more to buy the same “made in China” products. Furthermore, the regulations and tariffs western countries have imposed on China make export more difficult and costly.

The reality, experts say, is the opposite. China's exports to the U.S. have skyrocketed. The outsourcing and manufacturing of goods in China instead of the US has

China’s economical strength comes from its international trades as the economy has grown to a rate of 10.3% in 2010. It has become the world’s largest exporter in the global economy. In the

Having exports increase, however, would cause America’s imports to decrease. This would make it harder on international firms that have production occurring in China and other places around the world. A lot of Americans would believe this to be a good thing, as it would reduce job migration overseas. On the other hand, I see this as hurting the established American companies that rely on overseas production. If the United States did not have much production occurring overseas, then a weaker dollar would increase exports without as much of a detriment to the imports needed by corporations. With the increasing international trading of firms, revaluing currency would cause them to have to reevaluate their strategies and accommodate a more valuable Yuan. In the meantime, they would lose profits until their new strategies could be implemented.

The overall economic goal of the Chinese government is to keep the value of the yuan at a depreciated value compared to the U.S. dollar and other foreign currencies in order to hold the cost of their exports lower than they can be

In 1979, the U.S. overwhelmed West Germany to turn into China 's third biggest exchange accomplice. In 2004, the U.S. turned into China 's biggest exchange accomplice inside and out, surpassing Japan. In 1980, China was the U.S 's. 24th biggest exchange accomplice yet started to rapidly climb the positions. In 1985 China positioned sixteenth; in 1990 tenth and by 2006 was second just to Canada, which imparts a 9,000-kilometer outskirt with the U.S. This exchange relationship keeps on growing. Since the turn of the thousand years, China 's quickly creating customer economy has implied U.S. fares have been in expanding request in the Middle Kingdom. As indicated by US-China Business Council 's measurements, from 2000 to 2010 U.S. fares to China expanded by 465 percent. Amid the same period, US fares to different nations developed by a relatively small 56 percent. This development additionally denotes a decrease in U.S. fares to Japan, its fourth biggest exchange accomplice, of 7.4 percent. China-U.S. exchange has grown much quicker than even the most hopeful forecasts proffered by both Chinese and US financial arrangement specialists before the standardization of the two nations ' discretionary relations.

The big fear at the time was that Chinese devaluation would simply trigger a wave of beggar-thy-neighbour responses. The United States heaped much praise on China for keeping its policy discipline. Much has changed since 1997-8 when the fallout effects from the Asian financial crisis on US capital markets appeared to be relatively short-lived.

An undervalued currency also increases China’s attractiveness, as a destination for foreign investments especially from the U.S. Foreign investment is a great way to promote technology transfers, which leads to economic development. Furthermore, tourism industry also boomed as overseas tourists find it cheaper to travel to China than other parts of the world.

Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-13 Exports as a Percentage of Chinese National Income Exports / GDP in % 45 40 35 30 25 20 2004 2006 2008 2010 Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-14 Imports as a Percentage of Chinese National Income Imports / GDP in % 35 30 25 20 2004 2006 2008 2010 Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-15 Chines Exports to Selected Regions as Percentage of GDP Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-16 Chines Imports from Selected Regions as Percentage of GDP Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-17 Growth in Chinese Exports less Growth in World Markets 2000-2012 Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-18 Current Account Balance of Payments as Percentage of GDP Balance of Payments / GDP in % 4 3 3 2 2 1 1 0 2004 2006 2008 Source: OECD 2013 Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-19 The Gravity Model Three of the top ten trading partners with the U.S. in 2008 were also the 3 largest European economies: