The purpose of this assignment is to demonstrate your understanding of the concepts of international trade, balance of payments and exchange rates.
The U.S. and China have developed a strong and important international trade relationship in a relatively short amount of time that also has resulted in some challenges for each country. This has resulted in differing arguments on how to deal with the situation. The following Abstract is taken from this week's reading on US and China Trade:
"The article discusses the trading relationship between the U.S. and China as of October 2010. In the U.S., the political leaders in the country are using China as scapegoat to the poor performance of the U.S. economy and high unemployment rate. Among the main area of dispute of the two countries is their currency. During the United Nations (UN) General Assembly in New York in September 2010, the discussion between U.S. President Barack Obama and Chinese Premier Wen Jiabao centered on their currencies".
Answer the questions below in well-constructed paragraphs with a maximum of 500 words (maximum 2 pages). Analysis/discussion of the topic must include of a minimum of 2 high-quality, credible, relevant sources of outside information. Please double space your document, use MS Word, and of course, don't forget to put your name at the top. Make sure that you use proper sentence construction, grammar, punctuation, spelling and properly cite your references in APA format.
1. Provide an overview of the trade relationship between the US and China, including an explanation of the trade balance between the two countries and what it means, in your answer Identify the competitive advantage(s) of China and the US.
2. Many are calling for a revaluation of the Yuan in China. Explain why this is the case and the impact of a revaluation.
3. Since the financial crisis the US currency has been trading at lower levels, explain the impact of this on firms competing internationally. Secondly, explain how the lower value of the US dollar may impact trade directly with China.