US and China Relations Essay

Trading relations between United States and China have the long complex history of development. U.S. exports to China account for 2% of total U.S. exports to the world and the top five exports include electrical machinery, transport equipment, office machines, oilseeds and industrial machinery. The key export products are computers and oilseeds. China is a large source for imports as well, especially for the products requiring large labor input. China is U.S. fourth largest importer for the following goods: toys, games, telecommunication equipment, sound recording, footwear and electrical machinery.

China is often criticized for the low quality of the produced products. Chinese produce everything from bottle tops to car parts and the owners of the small U.S. manufacturing plants are not able to compete effectively based on the price (Davidson 2006). Chinese goods are sold for less than American manufacturers are charging. China is able to undersell U.S. manufacturers for the number of economic and social reasons. First, the labor costs are much lower in China. Second, the Chinese government keeps the currency at the low value.

In addition, the cheaper price of the Chinese clothes, electronics and car parts are beneficial for the Americans, as some retailers argue (Davidson 2006). Retailers get higher profits while the American consumers save money because they spend less. Moreover, the American large manufacturers benefit from the low production costs as well. For example, many international companies such as Nike produce their products in China and then import them to America (Davidson 2006).

It is impossible to definitely state whether the American economy benefits or is hurt by the Chinese economic growth. The small manufacturers are relatively hurt because of inability to cut costs in order to remain competitive; while the entire population consumers, benefit from the low prices. Nevertheless, the industries which rely on the low-paid low-skilled labor are destroyed by the Chinese competition (Davidson 2006).

There are also some concerned about the China’s inadequate protection of the intellectual property rights (Kerpen 2006). China also has some problems with overcoming trading barriers – China has attempted to illegally obtain U.S. technologies, usage of the prison labor in the production of the products and textile transshipments to the United States.

Some of the additional barriers include high tariffs on the selected items (autos and agricultural products), pervasive non-tariff barriers (import licenses, certification requirements and sanitary standards), trade rules (Chinese trading laws are often secretly formulated and unpublished making it difficult for the exporters to determine the regulations applying to the specific products), trading rights (China has restrictions for some goods to be imported into China which limit the ability of some foreign firms to obtain the goods), distribution rights (some foreign companies are prohibited to sell directly to consumers in China).

Despite of all disputes regarding the United States – Chinese trading relations, the Chinese economic growth and elimination of barriers are beneficial for the American economy and American consumers. United States has the largest economy and remains the biggest producer of the consumer goods in the world and it will take decades for Chine to unseat America. The cheap Chinese goods are of low quality, however, despite of this the price sensitive American customers benefit from the lower price.

United States have the better financial and legal systems, stable currency and social security. America is the leader in high-value industries and innovation. United States is believed to remain the global strongest economy as long as it is based on the high-skill and high-value products. Nevertheless, the Chinese economy is still the threat for the stability of American market, especially for the small producers of the low-skilled products. United States – Chinese trading relations are continuously growing and improving, the barriers are destroyed, regulations made clearer and quality of products is increased.

References
Davidson, A. (2006, April). Trade Tensions Between the U.S. and China. NPR.Org. Retrieved October 19, 2006, from http://www.npr.org/templates/story/story.php?storyId=5352175
Kerpen, P. (2006, March). U.S.-China Trade is a Win-Win. NationalReview.com. Retrieved October 19, 2006, from http://www.nationalreview.com/nrof_comment/kerpen200603010930.asp

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