International Trade Administration, Research Paper Example

The balance of trade is the difference obtained from the monetary value of exports and imports. This is an important economic indicator as to how the country can sustain itself from its own production activities relative to the amount of commodities or raw materials it is importing from external sources. China is one of United States’ biggest trade partners. Considering the current political relations between the two countries, it is essential that the balance of trade between the two countries be analyzed.

There is a general negative balance of trade between the United States and China as most the United States imports more from China than it exports to. There was a temporary decrease in the negative balance of trade position from 2008 to 2009, however, this negative balance of trade has continued to increase since then at $-226,877,204,877 in 2009 to $ -318,417,203,265 in 2013 (International Trade Administration, 2014).

This negative balance of trade on the part of the United States has grave implications for its economy while having positive implications for China. China will see an increase in the markets of its products resulting in increased GDP for China. However, this would lead to the drop in value of the US Dollar, followed by the control of certain sectors by Chinese companies. Such as computer and electronic products, apparel manufacturing products and electrical equipment, appliances and components.

There is also consideration of the debt position between the United States and China. As most of the financial investment into certain sectors within the United States are channeled from China, China will have a considerable financial hold on the United States, leading to an economic hold that can be utilized to influence policy within the United States.

References

Blanchard, O., & Johnson, D. R. (2013). Macoreconomics. Boston: Pearson.

Feenstra, R. C., & Taylor, A. M. (2011). International Trade. New York: Worth Publishers.

International Trade Administration. (2014, April 1). 2013 Balances with China for NAICS Total All Merchandise. Retrieved May 29, 2014, from TradeStats Express: http://tse.export.gov/TSE/ChartDisplay.aspx

Krugman, P. R., & Wells, R. (2013). Macroeconomics. New York: Worth Publishers.