Abstract
Since 1993, American trade deficit with China is expanding and the gap is becoming increasingly bigger. The widening bilateral trade imbalance has caused growing concerns. This paper, by using empirical method and adjusting the data of trade from 1989 to 2005, finds that the causes of the imbalance of China-US trade are as follows: 1) the imbalance of domestic demands of US; 2) the adjustment of American economic structure, and 3) the growing of multinational enterprises. The paper also finds that the imbalance of China-US trade is not as big as it was reported by US; the imbalance of China-US trade is an inevitable result of economic development, and the trade deficit does not necessarily mean a loss of profit. In fact, American investors and consumers have greatly benefited from China-US trade.
Highlights
Since China’s government adopted economic reforms and opening policy to the outside world in 1978, the bilateral trade between China and US has been developed rapidly
The paper finds that the imbalance of China-US trade is not as big as it was reported by US; the imbalance of China-US trade is an inevitable result of economic development, and the trade deficit does not necessarily mean a loss of profit
With a continuous widening trade gap, there are frequent trade frictions and disputes between the two countries, which can interfere with the bilateral trade development of the two countries
Summary
Since China’s government adopted economic reforms and opening policy to the outside world in 1978, the bilateral trade between China and US has been developed rapidly. According to the statistics provided by China’s Customs, the American trade deficit with China reached from US$ 6.3 billion to US$ 114.2 billion from 1993 to 2005, but according to the statistics provided by American Customs, the American trade deficit was from US$ 22.8 billion to US$ 201.6 billion from 1993 to 2005. This statistical trade discrepancy is so large that the problem of trade balance between China and US becomes more complicated. Why there is a so big statistical trade discrepancy between China and US? What the deep causes of imbalance trade between China and US are? This paper tries to make a study on these two issues
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