Assume that last month China exported goods worth 350 billion yuan and imported goods worth 331.6 billion yuan.

Assume that last month China exported goods worth 350 billion yuan and imported goods worth 331.6 billion yuan. This month China’s exports are 359.7 billion yuan and their imports are 366.9 billion yuan. Compute China’s trade balance for each of the past two months separately. Over the entire period of the two months, did China experience a trade imbalance? Explain

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Expert Solution

Trade imbalance means is there a trade deficit or negative balance of trade. Yes, we can see clearly that this month's trade is negative hence there is an imbalance of trade for China.

This happened as the country has imported more than it exported for which the balance has gone negative by 7.2 billion.

Trade deficits generally happen when a country couldnot have efficient capacity to produce its own products. This might be due to lack of skill and resources to create that capacity or due to preference to acquire from another country.

jeff jeffy answered 2 years ago

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