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Negotiate With China

China argues that the trade imbalance with the U.S. is due to consumer choice rather than policy manipulation, and suggests collaborative trade policy solutions. Critics claim China unfairly 'hoards' earnings by maintaining a trade surplus and undervaluing its currency, which disadvantages American goods and jobs. The growing trade deficit with China poses risks to the U.S., including job losses in manufacturing and increased reliance on foreign goods.

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6 views2 pages

Negotiate With China

China argues that the trade imbalance with the U.S. is due to consumer choice rather than policy manipulation, and suggests collaborative trade policy solutions. Critics claim China unfairly 'hoards' earnings by maintaining a trade surplus and undervaluing its currency, which disadvantages American goods and jobs. The growing trade deficit with China poses risks to the U.S., including job losses in manufacturing and increased reliance on foreign goods.

Uploaded by

chautsb234081e
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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(1) Can you explain China’s position in the debate? How do you think China should respond?

- China’s position: China argues that the trade imbalance exists because U.S. consumers
choose to purchase Chinese goods due to their affordability and availability, not Chinese policy
manipulation. Moreover, China points out that multinational corporations, including many American
ones, are deeply embedded in Chinese production chains and benefit from exporting goods back to
the U.S.

- China should respond by emphasizing that they are meeting consumer demand and that
addressing the imbalance may require both nations to work together on trade policies, rather than
placing blame.

(2) Many critics say China is not playing by the rules by unfairly “hoarding” earnings from exports
to the United States. What does this mean?

This criticism refers to China’s historical practice of accumulating large foreign exchange
reserves, especially U.S. dollars, by maintaining a trade surplus and intervening in currency
markets. By keeping the yuan undervalued, China made its exports cheaper and imports more
expensive, contributing to trade imbalances.

Critics argue that instead of allowing its currency to appreciate naturally with its growing exports
(which would help correct trade imbalances), China "hoarded" U.S. dollars, which:

- Suppressed demand for American-made goods in China,


- Gave Chinese exporters an unfair competitive advantage,
- Contributed to U.S. manufacturing job losses.

However, China has been gradually shifting away from this model in recent years, allowing more
market-driven exchange rate policies.
(3) Is the growing trade deficit with China harmful to the United States?

The growing trade deficit with China may cause several harms to the US:

- Leading to job losses in domestic manufacturing sectors.


- Increasing reliance on foreign goods, reducing U.S. economic independence.
- Putting downward pressure on U.S. industries due to competition with cheaper imports.

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