Sino-us Trade Imbalance: Causes And Bilateral Economic Impact

Sino-US trade imbalance has been focused by many theoretical-researchers and policies-makers. Some U.S. scholars and government officials believed that Sino-US trade imbalance, which was caused by both the devaluation of Renminbi and the decline of competitiveness of goods U.S. exports, especially in manufacture industries, had a negative impact on U.S. economy. However, many empirical studies have showed that U.S. had experienced rapid economic growth and lower unemployment rate when trade deficit increased. So the above views can not provide effective interpretation.We will began our research on Sino-US trade from the perspective of economic globalization, and regard it as the inevitable result of two factors: the capital and technology advantages of U.S. and labor advantage of China. On the one hand, the United States, which was impulsed by technical progress, needed to upgrade domestic industrial structure and transferred labor-intensive industries or processes to developing countries. Because many U.S. multinational companies invested in China and exported commodities to U.S., the amount China imported from U.S. decreased, while the amount China exported to U.S. increased. On the other hand, with the process of reform and opening up, China gradually integrated into the global production system, its vast labor resources made it the main destination of labor-intensive industries or processes. China has become the largest importer of components in East Asia, while the ratio of its final products export to U.S. to that of the whole region also increased. As a result of these changes, the East Asian countries'trade surplus with U.S. became China's trade surplus with U.S..Sino-US trade imbalance had far-reaching impact on both countries'economy. As far as China is concerned, undertaking large-scale international industrial transferred from other countries has made supply and demand simultaneously expand and promoted the long-term economic growth. To the United States, although many commodities imported from China reduced the income of workers in the same industries, they increased the welfare of consumers and maintained price at a low level. Then, the demand to other products, especially that to service and high-tech industry products expanded. At the same time, the decrease of production costs, which caused by lower labor costs and input materials, improved U.S. investment level, particularly that in service industry and high-tech industries. Therefore, the trade imbalance also promoted the industrial structure readjustment and economic growth through expanding demand and increasing supply.In order to prove the positive impact of Sino-US trade deficit on the U.S. economy mentioned above, we build a model on the basis of Structurist's two-sector model in order to analysis the relations between trade imbalance and economic growth. According to the conclusion of this model, given certain conditions, trade imbalance will not only benefit the surplus country, but also promote the economic growth of the deficit country. Apparel industry is one of the industries that undertake more international transference, with stronger competitiveness but also triggered many Sino-US trade disputes. This article will take this industry as an example to prove that Sino-US trade imbalance has been important to the U.S. economy.