Posted by: bklunk | April 18, 2007

Two Can Play That Game

The US has been concluding bilateral agreements with other countries for years, most recently with South Korea.

China enjoys trade relations with other countries « Chinese International Affairs

Source: http://www.nytimes.com/2007/04/18/business/worldbusiness/18yuan.html?pagewanted=2&n=Top%2fNews%2fWorld%2fCountries%20and%20Territories%2fChina&_r=1

As China’s trade surplus continues to increase, its trade relations have also diversified. Until recently China had been the second-biggest exporter to US markets. Early this year it ranks the biggest. Nevertheless, China’s exchange rate of the yuan to the dollar has been the cause of the recent protectionist stance of the US against China’s exports. The CCP has condemned the US stance on their currency value. While the government has not directly recommended business entrepreneurs in trading with other countries other than the US, trade relations have diversified. As global leaders continue to increase trade relations with developing countries for the purpose of increasing their profits and avoiding placing all their eggs in one basket, government officials are hoping for greater diversity to emphasize their global influence.

Chinese officials are expected to go on another buying trip to the United States before next month’s round of meetings in Washington to discuss economic policies with the United States. By wrapping together a lot of separate purchase agreements in a few heavily promoted announcements, the officials hope to portray the United States as needing the Chinese market.

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Responses

  1. US trade interaction with China even from the beginning has been heavily scrutinized from many different angles within the state. While the US is still open to trade with China it appears that one of the few ways that it can put forth market controls is through the use of an exchange rate control. This control benefits the US, but puts China in a position of loss in certain respects. Obviously this is going to be frowned upon by China, who in its development is pushing for super power status. If China is going to succeed in their aims however they need pull in American business and support as possibly the only “super power” still around.

    From the US perspective it appears that the aim is protecting the US economy and maintaining the value of the US dollar abroad. Over the last several decades the increase in “outsourcing” and using foreign labor markets has increased dramatically. This might have something to do with US policy on the Yuan in an attempt to not put too harsh of controls directly on companies working outside the US buy still “encouraging” them to operate in certain ways.

  2. From the eyes of the U.S. the obvious motive for what has been going on is that we are trying to first maintain the value of the dollar, because it has become much weaker over the last 30 years. The second motive is to protect our economy while also expanding our markets so that we can also benefit and grow from an agreement with a country such as China. It is true that trade interaction with China has been looked at with caution on both sides for some time, because it it not necessarily win-win on for either side. Hopefully though they can caome to an understanding where both can benefit so this doesn’t stay an issue between the two countries, because right now its just another issue of the many in the sketchy relationship we have with them.


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