Export growth has continued to be a major component supporting China’s economic growth. China has a trade surplus. China major exports to U.S. are:
- Computer and electronic products
- Miscellaneous manufactured commodities
- Electrical equipment, appliances and components
- Apparel manufacturing products
- Leather allied products
China major imports from U.S. are:
- Agricultural products
- Waste and scrap
- Transportation equipment
- Minerals and ores
- Petroleum and coal products
Over the long-run, nations with trade surpluses tend also to have a saving surpluses.
• The trade balance of U.S for the period of 2005-2009:
The U.S is importing more and more high-tech goods from China.
U.S. exports to China have been growing rapidly as well from the low base. But still the U.S. has a trade deficit with China. Running a trade deficit is not necessarily bad. But, an ongoing trade deficit is detrimental to the nation’s economy over the long-run because it is financed with debt.
China is able to produce goods that Americans want at a low cost. Because, standard of living is lower in China and an exchange rate that is partially set to be always priced lower than dollar.
So, the factors that affecting the balance of trade of U.S. are:
- The cost of production in the China is cheaper than here
- The cost and availability of raw materials, intermediate goods and other inputs are costs lower in China