Is China a Risk to American Economy - Research Paper Example

? The assumption that China was going to become the biggest threat to the US economic dominance has proven false due to the fact that China is becoming the US biggest exporting allied. The Chinese nation has been importing goods and services from the US at an astonish rate since the start of the 21st century. In 2000 China imported $16.2 billion from the US. By 2010 the amount of US imports in China increased to $91.9 billion (Barboza). The rate of growth in US exports during the 10 year span was 468% which is 413% higher than the export growth to the rest of the world. China has become the fastest growing region for exports for the United States. China is indirectly contributing positively to the job creation in America. More exports leads to more work that is required by the labor force of America. The majority of the exports are derived from the states of California, Texas and Washington. These states are selling a lot of microchips, computer components and aircrafts. Other products that are being exported to China include grain, chemical, and transportation equipment. Part of the president’s Obama economic plan included doubling US exports by 2014. The export growth in China may allow that campaign promise to become truth. China has become the second largest importer in the world behind the United States. The United States imports $1.9 trillion compared to China’s $1.4 trillion (Barboza). Despite China’s efforts to catch the US in the amount of imports its people consume the disparity in terms of per capita consumption are still quite large. The exports of crops are growing to China due to the lack of water and arable land. The overpopulation in China is another negative variable that is affecting the distribution of wealth in China. China has four times the population of the United States despite China being the size of Texas. Recyclable materials and paper are items that China is importing a lot. Last year New York sold over a billion dollars worth of waste and scrap to China. The main thesis of the author is that as Chinese is growing so is the nation’s demand for American made products. I agree with the author’s theory because the author showed empirical evidence that showed a clear consumption pattern. During the last decade China has been achieving double figure growth in its import to the US. Last year US exports to China grew by 32% in comparison with the previous year. There are many factors that are causing this phenomenon. The cultural impact of the American culture that is widely spread throughout the world with the assistance of the media has created a more consumerism society in China. China has slowly liberated itself from its one dimensional perspective concerning the liberties of its people. The Chinese people idolized the American culture which is one the reasons for the increase in exports to China. Another reason for this occurrence is the fact the income capacity of the Chinese has gone up. There is a growing middle class of Chinese consumers that are eager to spend their hard earning money. The infrastructure of China is another of the reasons why China depends on the US for crops. China cannot create sufficient food to feed its people. The one child law created in 1979 was a move that slowed down the human growth in China, but the population is still the largest in the world. China has a need for construction products such as Iron. Old junk cars are perfect raw material of iron that is in high demand in China. An increase in the amount of imported goods from the US gives China bargaining power in its economic negotiations since now the US is depending more on the money businesses are making by exporting to China. China has a lot to gain by becoming a bigger importer of the US. Improving its international relations with the US is beneficial for both parties. It is possible in the future that these two countries might become allies and create a free trade agreement between the two nations. This scenario is not impossible because nobody could have imagined that US exports to China would grow by 468% since 2000. There are other factors that are increasing the trade between China and the United States. The internet is another reason why the imports and exports of these two nations are increasing. The size of the US ecommerce marketplace is $153 billion (Plunkett Research). Currently the government of China still uses censorship, but the situation has gotten much better in terms of liberation of knowledge and ideas. The internet will further integrate the US and China culturally. Social sites such as Facebook, Twitter, and MySpace are perfect examples of how the internet is connecting people from different parts of the world. Ecommerce has the potential of becoming a bigger contributor to the trade between the United States and China. As a developed nation that fought hard to improve the quality of life of its people the US can teach China a lot in its road towards becoming a developed country. In this process the US business infrastructure can benefit from the continued growth of exports to the People’s Republic of China. The greater income power of the Chinese population has influence a lot in the buying behavior of its customers. The United States has done a great job of attracting business from China. A lot of these imports could be acquired elsewhere, but the US has been the beneficiary of the increased importing of products by China. The United States could continue to benefit by establishing more of a physical presence in China to increase the sales of products and service from China. A lot of penetration could occur from servicing companies such as Starbucks Cafe and McDonalds. Wal-Mart is another company that would be could benefit from expansion into China. The US economy has benefited a lot from the exportation of products into China. In order for the US to recover its dominance in the world economy the nation’s GDP has to increase. The nation will achieve its growth potential if it is able to increase its exports. The export trend to China in the 21st century is a bright spot in the international relations in the United States. The overall trade deficit with China will decrease as China continues to spend money on American made products. Despite the incredible growth that was achieved during the first decade of the century the potential for growth during the second decade is even greater. The exports of foods items are a category of exports that can increase in the future. As Chinese people begin to accept more the western eating traditions the imports of food from the US will continue to increase. As improbable as it may sound in the near future we might hear the Chinese people claim that Americans are taking jobs away from the Chinese due to the excessive amount of imports that are generated in international trade between the two countries. In reality this possibility is not realistic because China is importing a lot of goods that they simply cannot manufacture internally because they the learning curve knowledge associated with the production of these products. The same is truth for the United States which cannot compete with China in light manufacturing industries such as the apparel industry. In international trade countries should concentrate in manufacturing goods and services in which they have a competitive advantage. Another way in which the international relations between the two nations may benefit China is if China increases its outsourcing of activities to US manufacturing plants. Due to the higher income capacity of the Chinese population an industry in the US that may benefit a lot from the additional wealth of Chinese customers is the automobile industry. Automobiles are expensive items, thus an increase in the exports of these items to China could significantly increase the total exports to the country. The large population of 1.3 billion citizens is one of the reasons US marketers are so attracted to the Chinese marketplace (Rosenburg). Another factor of interest to marketers is that China has a concentrated population in a small territory of space. The international trade tendencies between the United States and China have changed a lot during the past ten years. In the 20th century the US was the country that was importing goods from China at an alarming rate. China did not have the income capacity to purchase a lot of goods from the US or other destinations. The cultural influence the US has over China has helped improve the image of US products in the minds of the Chinese people. As the Chinese customers have increased their purchasing power they are looking more to acquire American products. Based on the actual growth achieved during the past ten years it is highly probable that Americans might be able to double their exports to China by the year 2014. The US economy will continue to benefit if it is able to maintain large amounts of exports into China. A possibility that would improve the relations between the US and China would be the creation of a bilateral trade agreement. It is in the best interest of both nations to lower the cost of doing business among each other. The power economic power of China has increased a lot in the last decade. Work Cited Page Barboza, D. 7 April 2011. “As China Grows, so Does it Appetite for American - Made Products.”New York Times. 10 April 2011. Plunkett Research. 2011. “Ecommerce & Internet Industry.” 10 April 2011. Rosenberg, M. 2011. “China Population” About. 10 April 2011. Read More