U.S. Trade Deficit with China

In 2009, the U.S. trade deficit with China was $227 billion. This was the largest in the world between any two countries. The deficit means that the U.S. exported $69.6 billion in goods and services to China, while it imported over $296 billion. This deficit has continued to grow over the last decade as China established itself as the second leading economic power in the world, behind the United States.

The primary reason for such a large trade deficit is that China is able to produce low-cost goods that Americans want. Most economists agree that China's competitive pricing is a result of two factors:

• A lower standard of living, which allows them to pay lower wages to workers.
  
  
• An exchange rate for the "Yuan" that is partially set to be always priced lower than the dollar.

China buys U.S. Treasury Bills to support the value of the dollar and keep its exports cheap relative to the dollar. Last year, China became the largest owner of Treasuries—$789 billion in which is 33% of the total $2.4 trillion outstanding. The plus side of this imbalance is that by buying Treasuries, China helps keep U.S. interest rates low.

However, many government leaders and economists are concerned that this ownership of American debt gives China political leverage over U.S. fiscal policy, since it could theoretically call in its loan. It also means that U.S. companies that can't compete with cheap Chinese goods must either lower their costs or go out of business. To lower their costs, many companies have started outsourcing to India and China, adding to U.S. unemployment. Other industries have simply dried up. As these industries declined, so has U.S. competitiveness in the global marketplace.

ProQuest has created a BookCart learning activity to help your students learn more about—"Trade Deficit with China."

This is one of hundreds of BookCart learning activities that librarians and/or teachers can copy to their local collections, using this method:

• Open eLibrary TEACHER EDITION.
• Click BOOKCART ADMIN link at the top.
• Click the PROQUEST CARTS tab (800 ProQuest models).
• Type "Trade Deficit with China" in the Search box.
• Click the COPY icon in the ACTIONS column to the right of the title.
• Click RETURN TO MY LOCAL CARTS tab to end the copying process.

Librarians or teachers can edit this BookCart to customize it for their students. To edit this BookCart:

• Click the new BookCart TITLE with the prefix "COPY OF".
• Delete "Copy of" and then type your name in the AUTHOR boxes and your initials in the EMAIL box (required filler info).
• Option: Edit any ESSENTIAL QUESTIONS for your students in the DESCRIPTION box.
• Option: Edit the existing STUDENT DIRECTIONS in the Description box.
• Scroll down and click SAVE.
• Click RETURN TO MY LOCAL CARTS and view your new student learning activity.

Good news! Reviewing and copying hundreds of ProQuest model BookCart learning activities has been made more convenient by using the new hyperlinked titles list (PDF) organized by curriculum area.

Assign students to complete a report of at least 150 words that cites at least three resources. Or students may choose a PowerPoint report of at least two minutes and seven slides. Students should use the pathfinder listed below to save time in finding relevant resources. They should address the essential questions for critical thinking listed below (you can add or substitute others):

• How can China keep prices so low to maintain a trade advantage with U.S.?
  
  
• In what ways does the trade deficit with China create a significant economic disadvantage for American business and workers?
  
  
• How can China's ownership of 33% of outstanding U.S. government debt impact the standard of living and other U.S. national interests ?
  
  
• Why are there hazards in buying goods from China?
  
  
• What proposals would you offer to make the U.S. more competitive with China?

Select the Advanced Search option > Type "Trade Deficit and China" in the Search box > Enter "China OR Trade OR Deficit" in the Document Title box > Sort results by DATE

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