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Thursday, April 7, 2011
Post#2 Exporting to China
I thought that this article about China's growing culture of importing goods was interesting. Do you think that because the Chinese import so many American goods that perhaps there is hope for our economy to slowly switch back to a non service economy, a manufacturing based economy? Even if China imports more than the USA and becomes Number One Importer just to export more products do you think that we have a chance to grow our industries? I think that because we export many intermediate products we have a chance to grow our manufacturing. We really do have a strong technology sector because we have so much research going on here. I think that this strong research background will help us increase our exports and therefore the GDP will increase as well as help us get out of Debt. I believe that even if our consumption levels stay relatively the same we will gain more by exporting to China because the Chinese will then export the finished products to the rest of the world. This article gives me a lot of hope. And I hope one day I actually can buy an American flag made in America. :)
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I think that a large part of this increase in exports has to do with the dollar's loss of value.
ReplyDeleteI doubt exports will continue to increase, when (or if) the dollar increases in value.
My only problem with increasing exports to China is the fact that the U.S. population is losing all those intermediary jobs. Now I know i'm gonna take this in a little different direction, but with these loss of jobs our unemployment has increased and i believe will continue to increase, meaning those that are close to cashing in social security will be leaning on that to help get them through their older years. The only problem is how long is our social security in the U.S. going to continue. My group in intermediate macro did a presentation on the savings rate of China compared to the U.S. We found that China has no social security but there saving rate has dramatically increased over the last 20-30 years to just under 50%, compared to the U.S's ~8%, if i remember correctly. One significant reason this has happened is because China has gained and invested in jobs from foreign countries, such as the U.S, and their economy has taken off. My question is why can't the U.S. keep the same jobs they are shipping to China and create the same economic growth? I know I probably don't have enough information to back all this up, but for me it is troubling how we can help another country grow so significantly with jobs we gave them and only grow dig ourselves deeper into debt.
ReplyDeleteI do not think there is any real possibility of the US economy shifting back to a manufacturing based economy or moving away from service based jobs. If anything, we will continue to increase our service based jobs especially as we move towards information and data based jobs. In Urban Sociology we took a look at our great grandparent's jobs, our grandparent's jobs, and so on through our current jobs and our future/prospective jobs. Almost entirely since our parent's generation there has been zero to no manufacturing positions. Instead, most work in the service industry and our generation is increasingly entering the information technology industries.
ReplyDeleteAlso, as far as increasing exports goes, the general principle is that when exports increase, imports also increase. This is why Obama's plan last year to increase exports would also lead to an increase in imports. Sadly, it's been a while since I took Patrik's class, but I do remember this principle. :)
Jennifer, I don't quite understand your logic in this sentence, "I think that this strong research background will help us increase our exports and therefore the GDP will increase as well as help us get out of Debt."increasing GDP does not mean we can get out of debt, we have a history of spending more money the more money we have.
ReplyDeleteAs for the increased trade with China, the trade gap still exists, and the dollar is still weak.
And one can buy a US Flag made in the Land of Promise http://www.flagstoreusa.com/ :)
As the value of Yuan rises (it will keep rising slowly), manufacturing costs in China will rise accordingly, which may give multinational corporations a reason to shift operations. There is a lot of foreign direct investment heading into Vietnam. But, right now, China is still one of the most cost competitive countries for manufacturing.
ReplyDeleteAs Beth noted, the information and technology industries will be the drivers of our economy moving forward.
Great Video:
ReplyDeleteWhat If China Collected on U.S. Debt?
http://www.youtube.com/watch?v=T1dDIrOCbUo
Mark, really good video, I liked that a lot.
ReplyDeleteOne thing I have noticed is that just about everybody is "afraid" of China in one way or another. Either China has too much of our Government's Debt, or we have too high of a trade deficit with them, or they have too large of an Army and a Communist government, or they don't care enough about the environment. I just thing we spend too much time worrying about China, and how to fix "problems" we have with them, and not enough time working on expanding the mutually beneficial relationship that our two countries have. I understand that many many thousands (millions?) of jobs have been lost to outsourced jobs, but we have a very good consumeristic relationship with China - they make our goods for cheap (we like) and they are starting to buy our technology goods (we like). Maybe I am in the minority and I am just not aware of the potential pitfalls, but I think there is endless growth opportunities in China, especially over the next 15-20 years when they will continue expanding rapidly, and until then, we should focus on maintaining a great "working" relationship.
Great comments and lots of different perspectives. One thought: the dollar was/is overvalued. So our goods are relatively overpriced. Any devaluation of the dollar is good for the export economy. But there are always winners and losers.
ReplyDeleteI agree with Jared that over the next couple of decades we should hang on to this relationship that we have with China, because clearly China as a whole is going to grow significantly during that time. I think we fear China so much because of the potential that they have, and the likelyhood that they will someday be more powerful then the US and the rest of the world. To me having a communist powerhouse is a very scary thing... On the other hand I believe we need to continue benefiting from China's low cost of manufacturing, while improving information and technology here in the US as long as possible. I think information and technology, more specifically renewable energy, will be the future of U.S. economic growth. I believe we as a country will never be the manufacturing nation that we once were.
ReplyDelete