Who will benefit from US trade deficit with China?
Who will benefit from US trade deficit with China?: "searchword"
Wednesday, Apr 27 2005 Beijing Time
Who will benefit from US trade deficit with China?
Last Updated(Beijing Time):2005-04-26 09:39
By Guan Jinyong
Recently, some US politicians and businessmen request the government to establish various measures to crack down on China because of US facing the adverse balance of trade with China. However, the surpluses in the Sino-US trade accounted on the Chinese side actually have fallen into the purses of the American enterprises, while Chinese enterprises just gained a little manufacturing fee. Some Americans, who have gotten the profits, still complained a lot.
According to the statistics, the US trade deficit with China was US$162 billion in 2004, ranking the top among the US trading partners. As a result, some American councilors declared that, the RMB was greatly undervalued after it had been in conjunction with the US$, which made the Chinese goods stands in an unfair beneficial position in the global market to defeat the US manufacturers and workers, and eventually caused the sharp rising US trade deficit. Thus the United States should take some actions to this.
The disputes between US and China should be solved through consultations instead of putting forward the aggressive amendments. Releasing the RMB exchange rate right now will destroy the bank system of China as well as impact negatively the American companies that depend on China's import. The chief economist from Morgan Stanley Asia indicated that "It is really difficult to find someone who are dissatisfied with the Sino-US trades in America, because many got their jobs and the US companies earn great profits from these trades with China, while China just only got the small part. It's weird for me that there are always someone raising the big stick of trading sanction indiscriminately."
It is reported that the total US import from China in February reduced by 17 percent, reaching the lowest from last June and the US adverse balance of trade with China also reduced to US$ 13.9 billion, the lowest from last May. But the US imports in February still increased US$ 23.2 billion with the growth rate of 6.8 percent. In the first two months of this year, the calculated trade deficit of the United States is also up to US$ 717.2 billion with the annual interest rate, which is US$ 100 billion or so higher than the history record of US$ 617.1 billion. Obviously, China should not be mainly responsible for the US unfavorable balance of trade, and China has already taken up less and less weight in the US trade deficit.
According to the latest data from Morgan Stanley, the American companies at least took away the profits of US$ 60 billion from the total amount of US import from China in 2004, sharing 10 percent of the total companies profits calculated by the Standard & Poor's 500 Index. About 4 to 8 million domestic occupations in the United States are related with the import from China. In other words, China only earned the low primary manufacturing fees by selling the products to the US, but the larger part of the added value of the products were all taken away by the American companies investing in China. Contrarily, it is thought that in the US its unfavorable balance of trade is all on account of China.
In the economists' opinion, whether Chinese foreign trade is fair or not should be judged by the total trade surplus. In the past few years, the total surplus of the Chinese foreign trade is only 2 percent of the annual GDP, which was minus value in the first half of 2004. Among the exporting enterprises in China, only 40 percent of them are completely owned by Chinese and the surplus 60 percent are occupied by foreign-funded enterprises. The data further show that China is not the main factor that caused the trade unbalance in the United States.
The unemployment in the American manufacturing industry is partly due to the developing countries, but this mainly attributes to the descending competitiveness of the American manufacturing industry. This kind of unemployment as the result of the competitiveness decline of the manufacturing industry is common all over the world, therefore in Europe and Japan many people lose their jobs every year, even China itself had lost about 6.5 million occupations from 1998 to 2003. There are some pains but also some gains on the unemployment issue. For instance in China, there are a great deal of jobs provided in the building industry and service industry lately.
Experts hold that China has its own distinctive competitiveness in the international market. China has the vast local market, and open trade system that is even superior to some developed countries. Moreover China has high quality labor force and good infrastructure, lays low tax on foreign capitals, and adopts the coherent economy reform policy, especially that China's independent creative abilities are much stronger than those of other developing countries.
The economic development in China will definitely affect the old trading structure of the world, and will necessarily create the new structure. But where the shoe pinches is that we should treat it objectively, not one-sidedly.
Source:CE.cn
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@ China Economic Net All rights reserved
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Wednesday, Apr 27 2005 Beijing Time
Who will benefit from US trade deficit with China?
Last Updated(Beijing Time):2005-04-26 09:39
By Guan Jinyong
Recently, some US politicians and businessmen request the government to establish various measures to crack down on China because of US facing the adverse balance of trade with China. However, the surpluses in the Sino-US trade accounted on the Chinese side actually have fallen into the purses of the American enterprises, while Chinese enterprises just gained a little manufacturing fee. Some Americans, who have gotten the profits, still complained a lot.
According to the statistics, the US trade deficit with China was US$162 billion in 2004, ranking the top among the US trading partners. As a result, some American councilors declared that, the RMB was greatly undervalued after it had been in conjunction with the US$, which made the Chinese goods stands in an unfair beneficial position in the global market to defeat the US manufacturers and workers, and eventually caused the sharp rising US trade deficit. Thus the United States should take some actions to this.
The disputes between US and China should be solved through consultations instead of putting forward the aggressive amendments. Releasing the RMB exchange rate right now will destroy the bank system of China as well as impact negatively the American companies that depend on China's import. The chief economist from Morgan Stanley Asia indicated that "It is really difficult to find someone who are dissatisfied with the Sino-US trades in America, because many got their jobs and the US companies earn great profits from these trades with China, while China just only got the small part. It's weird for me that there are always someone raising the big stick of trading sanction indiscriminately."
It is reported that the total US import from China in February reduced by 17 percent, reaching the lowest from last June and the US adverse balance of trade with China also reduced to US$ 13.9 billion, the lowest from last May. But the US imports in February still increased US$ 23.2 billion with the growth rate of 6.8 percent. In the first two months of this year, the calculated trade deficit of the United States is also up to US$ 717.2 billion with the annual interest rate, which is US$ 100 billion or so higher than the history record of US$ 617.1 billion. Obviously, China should not be mainly responsible for the US unfavorable balance of trade, and China has already taken up less and less weight in the US trade deficit.
According to the latest data from Morgan Stanley, the American companies at least took away the profits of US$ 60 billion from the total amount of US import from China in 2004, sharing 10 percent of the total companies profits calculated by the Standard & Poor's 500 Index. About 4 to 8 million domestic occupations in the United States are related with the import from China. In other words, China only earned the low primary manufacturing fees by selling the products to the US, but the larger part of the added value of the products were all taken away by the American companies investing in China. Contrarily, it is thought that in the US its unfavorable balance of trade is all on account of China.
In the economists' opinion, whether Chinese foreign trade is fair or not should be judged by the total trade surplus. In the past few years, the total surplus of the Chinese foreign trade is only 2 percent of the annual GDP, which was minus value in the first half of 2004. Among the exporting enterprises in China, only 40 percent of them are completely owned by Chinese and the surplus 60 percent are occupied by foreign-funded enterprises. The data further show that China is not the main factor that caused the trade unbalance in the United States.
The unemployment in the American manufacturing industry is partly due to the developing countries, but this mainly attributes to the descending competitiveness of the American manufacturing industry. This kind of unemployment as the result of the competitiveness decline of the manufacturing industry is common all over the world, therefore in Europe and Japan many people lose their jobs every year, even China itself had lost about 6.5 million occupations from 1998 to 2003. There are some pains but also some gains on the unemployment issue. For instance in China, there are a great deal of jobs provided in the building industry and service industry lately.
Experts hold that China has its own distinctive competitiveness in the international market. China has the vast local market, and open trade system that is even superior to some developed countries. Moreover China has high quality labor force and good infrastructure, lays low tax on foreign capitals, and adopts the coherent economy reform policy, especially that China's independent creative abilities are much stronger than those of other developing countries.
The economic development in China will definitely affect the old trading structure of the world, and will necessarily create the new structure. But where the shoe pinches is that we should treat it objectively, not one-sidedly.
Source:CE.cn
Related articles
· Five US int'l airports to test new security technology [2005/04/26]
· US prison population reaches new high [2005/04/26]
· US arrests 10 Thai nationals in car theft ring [2005/04/26]
· US high court declines to review case of POWs in Iraq [2005/04/26]
· US urges DPRK to return to six-party talks [2005/04/26]
@ China Economic Net All rights reserved
About us | Feedback | Contact
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