From the New York Times:
Contrary to popular opinion, China may be good for our trade balance. American consumers seem determined to spend money, and Chinese businessmen have made the bill cheaper.
It is not the case that China is simply draining the United States of money. Most of the growth in Chinese exports to the United States has come from switching manufacturing and assembly from other, more expensive, Asian countries. In 1985, China, Japan, Hong Kong, Taiwan and South Korea accounted for 52.3 percent of America’s trade deficit. By 2005, this percentage had fallen to 40.9 percent, in part because of cost savings from buying Chinese. [Full Text]
But US’s official stance is pretty much U.S. And China Agree on FX Flexibility: Paulson:
U.S. Treasury Secretary Henry Paulson said on Friday that the United States and China agree currency flexibility is “very important.” “Currency flexibility is one part of dealing with the global imbalances,” Paulson told a news conference after a meeting of finance ministers of Pacific Rim countries.
Also download China’s Embrace of Globalization” by Lee Branstetter, professor of economics at Carnegie Mellon University, and Nicholas R. Lardy, senior research associate at the Institute for International Economics, for data such as:
From 1986 to 1988, Taiwan and South Korea accounted for 60 percent of American footwear imports; China was only 2 percent. By 2001, market positions had reversed; China produced about 60 percent of the total and Taiwan and South Korea about 2 percent.
