Tuesday, September 25, 2012

China's Economy Falling off? Bad for America

It is a fact that with the debt that China holds of ours, they are fenced in to making sure we survive this down turn, and we are just as sure to keep China's industries growing to keep our heads above the financial waters.

We need each other, as most industrial nations are intertwined in industrial production. It's how the system of free trade is supposed to work, only it would be nice if we weren't so far in debt to just about everyone. 

Why Americans Should Root for a Strong Chinese Economy
Source: Josh Boak, "Why Americans Should Root for a Strong China Economy," Fiscal Times, September 21, 2012.

September 24, 2012
With both political campaigns pointing the finger at China for bad trade deals that steal American jobs, it is necessary to step back and realize the importance of a strong Chinese economy. The U.S. economy is heavily intertwined with the Chinese economy, and a slowdown for them could mean a slowdown for the U.S. economy, says Josh Boak of the Fiscal Times.

American jobs and the entire economy are dependent on China:

•More than 800,000 jobs relied on the $103.9 billion in goods and services shipped to China.
•U.S. exports to China have increased by 541 percent in the last decade.
•China holds $1.15 trillion in debt, which enables government expenditures on social programs and the military.
•Chinese firms invested $4.5 billion directly into the United States through mergers or the opening of new factories.
•Furthermore, the one million Chinese tourists that came to the United States last year spent an average of $6,500 each. The Commerce Department estimate that in 2016, 3.25 million Chinese will come to the United States to tour.
•Ohio alone exported $2.7 billion to China, an 838 percent increase since 2000.
•Finally, Chinese demand for American cars increased exports to China by 457 percent, or $4.55 billion.

However, opponents of China's industries do have some valid concerns. For example, it is estimated that the United States lost 1.9 million manufacturing jobs after China entered the World Trade Organization (WTO). Compounding this problem is that China has been able to artificially lower the value of their currency against the dollar. The Obama administration is currently pursuing a complaint with the WTO against China for subsidizing their auto parts industry.

China's economy can feel the impact of stagnant American and European economies. Chinese manufacturing has declined for the past 11 months as demand for products have gone down. Chinese corporate profits and property values have fallen 1.19 percent in the past 12 months, which has impacted American growth. Rather than bashing China, Americans should realize the importance of China's role in the import of goods and the benefits that are derived from trading.





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