Research Paper on "Trade War Between US and China on Currency"

Research Paper 3 pages (1045 words) Sources: 5

[EXCERPT] . . . .

Trade War between U.S. And China on Currency

Over the last several years, the issue of the trade between the U.S. And China has been increasingly brought to the forefront. The main reason for this is because the reforms that have taken place, are allowing China to quickly become a major economic power. As they have became the largest exporter, who is holding tremendous amounts of currency reserves and foreign debt. This is important, because the large account surplus that is being experienced has cause some nations (i.e. The United States and the European Union) to accuse China of engaging a new form of mercantilism at their expense. This is when the different nations will compete with one another, with the intention of creating large current account surpluses, by unfairly flooding trading partners with cheap imports. If left unchecked, this has the ability to create vast inequalities in the global economy, as key areas are deprived of wealth.

As a result, the artificial peg on the Chinese currency (the yuan) has become a source of major contention. This is because, the yuan has become significantly undervalued (due the peg that is in place), making Chinese imports much cheaper in foreign markets. At the heart of the issue, is the overall rate that the Chinese should let the currency appreciate, as many Western nations are calling for the peg to be completely removed. This (they argue) would help to address the obvious trade imbalances that are taking place. While on the other hand, the Chinese believe that they should take gradual steps towards revaluation. This is because they feel that drastic moves, to the currency could have an impact on: unemployment and economic growth. At which point, relations between these nations and China have become increasingly strained.

This is heart of the potential trade war, as the overall rate of currency revaluations, could spark heated emotions and animosity.

Body

The growth of China in the world market first began in the late 1970's and involved shifting, the allocation of various resources away from the government to private entities. This was part of a larger plan to modernize China and bring the nation into the developed world. Over the course of time, this policy would mean that certain actions would need to be in place, to help China experience continued economic growth (the pegging of their currency against the dollar). This would allow the country to have an advantage of importing cheaper manufactured goods into the United States. As various trade barriers and restrictions were reduced, to help facilitate increased amounts of commerce between the two nations. Over a period of several years, this allowed China to experience consistent trade surpluses, while the U.S. would have large trade deficits. This is problematic, because it would mean that U.S. was experiencing a loss of wealth and power (from the large trade deficits) at the expense of China.

To rectify this situation, many in the U.S. began to call for a loosening of the currency against the dollar peg. As they felt that the increase in fluctuation would allow, the market to address the natural imbalances… READ MORE

How to Reference "Trade War Between US and China on Currency" Research Paper in a Bibliography

Related Research Papers:

Trade War Between US and China Research Paper

Trade War Between U.S. And China

Trade War between the U.S. And China

Over the last several years, trade between U.S. And China (in terms of currency) has been exacerbated… read more

Research Paper 3 pages (870 words) Sources: 5 Topic: Economics / Finance / Banking

---

United States Engaged in a World Term Paper

United States engaged in a world wide war against terrorism in the wake of September 11th, it is believed that we have become much more isolationist in our economic and… read more

Term Paper 10 pages (3295 words) Sources: 10 Style: APA Topic: American History / United States

---

Is China's Currency Too Strong? Term Paper

China's Currency Too Strong?

If the Chinese government revalues the yuan by 20% or more, this would in the long run be a desirable outcome for American consumers. The present… read more

Term Paper 2 pages (819 words) Sources: 5 Style: APA Topic: Economics / Finance / Banking

---

China Is Not a Threat to US Economy Term Paper

China a Threat to the U.S. Economy?

Many people feel threatened by the rapid growth or China's economy. Some are concerned that China's large population of low-cost workers will eventually… read more

Term Paper 6 pages (1587 words) Sources: 1+ Topic: Economics / Finance / Banking

---

South Korea and the United States Term Paper

South Korea and the United States

South Korea and North Korea, the two parts of the peninsular nation called Korea who shared identities for more than 5,000 years, have still… read more

Term Paper 11 pages (4877 words) Sources: 1+ Topic: World History

---

View 100+ more related papers  >>