A Study Of Sino-US Trade Imbalance In The Background Of Economic Globalization

Trade volume between China and the U.S. increased dramatically after the Reform and Opening-up policy was adopted by China, and notably, it experienced a rapid growth after the 1990s. Thus far, evidences show that bilateral trade between China and the U.S. plays not only as a major component in both countries'trading behaviour but also a crucial element in their economic development. Whist all the merits are acknowledged, rising attentions has been drawn to the downside of that increasing trade-the trade imbalance. The 21st century witnesses a huge increase in trade surplus between China and America resulting from the growing role China plays in the world economy. According to statistics China is the biggest source country for the U.S. trade deficit in 2008. The deterioration of trade imbalance between the two countries results in frequent conflicts on trade. Trade imbalance between China and the U.S. even becomes an important factor for political stability. Each government holds their own opinions on this issue and there is still no consensus in academic field. So our paper is to carefully study the causes of imbalance between China and the U.S.This paper consists of six parts. The first chapter is to review the existing relate theoretical and empirical research papers. The second chapter is to analyze structure of the imbalance between China and the U.S. from three aspects includes the whole structure, the different technology category structure and the surplus and deficit structure. It can provide statistic evidences for further investigation on the causes of imbalance. We get several results. Firstly, the whole structure shows that the growth rate of export has exceeded that of import from China to the U.S. since 1993. Secondly, the surplus from the low tech category plays a dominant role in the imbalance at all times. Thirdly, trade surplus from the high tech category rises significantly since 2000. Its status also increases quickly and is expected to overtake the dominant position of low tech category in the future. The third and fourth chapters are main parts of the paper, in which we deeply investigate the main causes of the imbalance. The third chapter is to study the effects of two macroeconomic factors: saving and exchange rate on the imbalance. We conclude that excessively expanding demand (exhausted saving) in the U.S. is the crucial factor of the imbalance and its influence is the biggest and will persist a longest time. In addition, the depreciation of RMB against US dollar is also a factor of the imbalance, but in terms of the size and length of its influence, RMB depreciation only has a limit or moderate influence on the imbalance. The fourth chapter studies the East-Asian factor of the imbalance and focuses on working over its different behavior on different technology category. We reach several conclusions. East-Asian transferring effect significantly exists on the high and middle tech category, while there is no evidence of such effect on the primary product and low tech category. Furthermore, such effect on high tech is bigger than that on middle tech. In addition, we also find East-Asian transferring effect exists on the resource manufacture products, but its motivation of transferring is base on the monopoly power from special resources, however, the motivation of transferring of high and middle tech derive from the monopoly power of core technology. The fifth chapter studies other or non-economic factors on the imbalance from three aspects of statistic caliber, service trade and the U.S. export control against China. There are some conclusions as follows. Firstly, the big discrepancy on the imbalance by the two government official statistics is greatly reduced by making some adjustments. Secondly, as the U.S. has comparative advantage on the service trade and China has advantage on the commodity trade, cooperation on service between the two countries will actually helpful to get a mutual benefit and helpful to improve the whole imbalance as well. After taking service trade into account, the total trade surplus from China to the U.S. decreases about 7%at the highest level. Thirdly, the U.S. export control against China is a long-term trade policy by the U.S. government. Both countries have suffered from such control policy because it restrains the export on advance technology product from the U.S. to China. Biotechnology, weapons and nuclear technology are most influenced, especially, the U.S. hardly sell weapons to China. The final chapter summarizes the main conclusions of the whole paper and subsequently proposes some efficient and feasible advices on how to adjust the imbalance.