The first section of this article, the author considered the incident to the request for revaluation of the currency of China's growing trade deficit between China and prevent the rest of the world. In this segment, the authors wrote in demand for its exports of low value not only because of its currency, but other factors such as government subsidies for companies and investors, expanding its business horizons and piracy issues International. E 'was derivedthat the market share of piracy increased from throughout the Western world and also reduce the need for imports to China. In this segment of this article, the author would like to begin to consider some issues concerning the trade deficit between China and the rest of the world, especially in the western world. Secondly, if the growing trade deficit is a threat in terms of monopoly. Third, if the options in the world to deal with the situation.
In terms of exports andThe composition of imports, the following statistics estimate the number of trade for China;
Exports - $ 1435000000000 (2008 est.)
Main Export Markets Partners (2008 est.) - US 18.6%, Hong Kong 12.7%, Japan 8.2% South Korea 5.1% Germany 4.2%
Imports - $ 1, 074 trillion (2008 est.)
Main import partners (2008) - 12.2% in Japan, South Korea 10%, U.S. 6.6%, Hong Kong, 4.9% Germany 4.5%
According to the Trade Center's Intelligence Report 2007, Chinalow-tech export goods in general, but not limited to television, computers, printers (storage devices in general), mobile phones, video recorders, electronic integrated circuits, puzzles, toys, phones, purses, wallets, women do not work knitted suits and the girls, leather shoes, among others. Its exports are more computers, printers, storage, parts for office machines, mobile phones, video recorders and radio transceiver. The higher imports including but not limited toelectronic integrated circuits, computer parts and office machines, television, radio and accessories and crude oil. Also referred to the report, China had much surplus in trade with countries like Hong Kong, Germany, Holland, Britain and Spain in descending order of magnitude in excess and there was a trade deficit with countries like Angola, Saudi Arabia , the Philippines, Japan and South Korea, in increasing order of magnitude of the deficit. These statistics show that China tends toSurpluses with the West hand and the deficit with countries in the developing world. Perhaps the net result of what the surplus in trade with the western world compared to the huge deficit with the countries in the developing and developed countries. Ultimately, it is fair to say that the trade deficit with the world is the result of a large trade surplus with many countries including the United States and Britain. From the structure of exports, is that China will need muchtechnological innovations to keep pace with exports. Therefore, the country can not do without high-tech machinery and other industrial inputs in the western world.
In fact, resilience and production in low-tech, not only maintains its exports. The economic analysis suggests that in the long term, the trade imbalance should be not only a threat if the country is the excess of the total should decrease the time more clearly. This is because the recent news we have of Chinatotal trade surplus fell below $ 196,070,000,000 34.2%. As an analyst, the decline is not shocking, given the slump in global demand. In addition, it can be concluded that if the crisis continues global and domestic demand in China continues to increase, then imports from China could also increase. The increase in imports is due to the large population of the country. Next would be the increase in imports of exports of the factor reducing the surplus. In the longer term this would reducedramatically the excess and smooth the way for fair competition between China and the world. It should be emphasized that the surplus reduction should be primarily of an expected increase in imports relative to exports. However, the resilience of the Chinese manufacturer can demonstrate to keep the implementation of this analysis is wrong. Finally, these developments are not to monopolize the market in China, so there is no need to wait paranoid.
Now there is anothermain reason why China has superior elasticity and export prices is to have products of the global recession. In the current crisis in global demand, two things are imminent: the market to be competitive and price-elastic goods is likely to be what makes it difficult to make a profit. In these circumstances, any attempt to raise prices, leading to a loss. In contrast, the lowest price will increase sales and profits might result. Apparently, theChina's capacity to introduce low-cost products to promote sales, export guarantee more sales and profitability. Once again, China seems to be done in this period because of its ability to exploit the flexibility of the product price in the current global downturn in demand for higher sales and thus more profit with success. They also suggest the industrial policy of the country and the manufacturing sector is exhibiting economies of scale in production of its products and this is a plus for hisExports.
The whole history of the trade imbalance is not limited to the above factors, but is indirectly strengthened by increasing investment in the country, especially its foreign direct investment and portfolio investment. These two components of investment are used as the backbone for its continued growth in exports as consumer confidence booster for the Chinese economy. The increase in foreign direct investment and portfolio investment from China to otherEconomies with the accumulation of huge foreign exchange reserves combined to create consumer confidence in the international situation and China in its products, although some cases a face-down on the quality of its products and also in investment. Moreover, the huge foreign exchange reserves are used to intervene on the foreign exchange market to influence on its currency, the yuan. This Action Plan for China allowed only when necessary to strengthen or weaken under intense pressure hisCurrency. Until then, market forces determine the yuan's rate, as it is allowed to float. Interestingly, for those economies with strong currencies against China, but the option is available, and to attract foreign direct investment and portfolio investment. On the downside products from those countries to expensive and unattractive, but for the head if their economy offers low rates on income tax rates, have high interest rates and a stable exchange rate,qualify as candidates for foreign direct investment and portfolio investment.
Now I do not want this article, not to mention the effects of inflation on Chinese products pricing in the middle of the impressive growth the country's GDP at the end. inflation rate in China is relatively high. Consumer Price Index (CPI) inflation measure reported an increase this value by 1.9% in December 2009 over the previous year. But the low value of its currency coupled with publicdominated by the power of inflation. On the other hand, this is not sustainable because inflation is a problem given the increasing domestic demand in China can be. The increasing demand because of the large population with a static supply of goods may be accompanied by (imports) cause a rise in inflation (demand pulled). In addition, increased demand for raw materials for its industry and the manufacturing sector in the face of shrinking global supply of raw materials may increase inflation (cost push) inChina and around the world. This suggests that not only are the statistics on CPI, which will be affected by these developments, but also the Producer Price Index (PPI) statistics, which should stop a manufacturer in China. These developments may also increase interest rates by the Chinese government promptly to contain inflation.
Finally, the world is not enough viable options to address the situation of trade imbalance except, of course, to pressure China to revalue its currency. But withAs for the subsidies the Chinese government is an internal matter that can not be influenced by an external source. The rest of the world can agree with China to promote a free and fair global market. Another option is to do nothing for the world and therefore the global crisis and the market forces to address the situation in the long term. The introduction of tariffs and quotas can have a minimal effect and should not be used.
Conclusion
Recenteconomic news about China has undoubtedly lifted Germany as the largest exporter in the world around the world about the rise of China as a new economic superpower and the world can be a locomotive for the world economy lit. Behind these developments is the claim that the company for the low value of Chinese yuan currency makes its exports more attractive and competitive has been improved. Consequently, it is expected that in the coming months or years, Chinaforced under increasing pressure to revalue its currency to make their products less competitive in order to avoid the growing trade between China and the rest of the world. However, it is not only the low currency value, exports lower, but other factors such as government subsidies and financial support of China's horizon trade, piracy issues, and price elasticity of goods in the global recession. Unfortunately, the solution of these problems show aHerculean task in which there are many opportunities for the world.