Question

During the 1990’s and 2000’s many public intellectuals, including economists, predicted that specialization according to comparative advantage would increase the standard of living both in the United States and in the countries with which it traded.

Discuss the benefits and costs of trade with China at the individual and national levels.

Answer 1

Benefits are:

China is the 4th largest export market in America, and the 2nd largest producer of goods imports. Last year US exports to China totaled $55.2 billion, while US imports from China totaled $287 billion.
Since China entered the WTO in 2001, exports of US merchandise to China have risen by 187 per cent. U.S. exports to the rest of the world increased 38 per cent over the same period.
The United States has a trade surplus with China on services. In 2005, it was at $2.6 billion.
Home goods, sporting equipment, apparel and footwear – fairly low value added consumer products – are among the top Chinese imports in the US.

Largest country in the world by population fast-increasing consumer demand rising number of middle-income consumers close to Asia Pacific area and economies marked growth guaranteed by Chinese monetary policy forecast to become the world's largest luxury goods demand by 2020 London positioned as a emerging hub for Chinese currency industry flourishing industry base.

Costs are:

Large parts of the economy are still closed to full foreign participation

Heavy competition from well-resourced and placed state-owned enterprises seeking and maintaining the right skills in the local workforce

Complex language business culture barriers require patience to develop trust and networks

Major time gap severe weather around the world and high polling rates