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China's Currency: A Summary of the Economic Issues [April 13, 2009]
"From 1994 until July 2005, China maintained a policy of pegging its currency, the renminbi or yuan, to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar. The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the yuan and the dollar basically stayed the same, despite changing economic factors which could have otherwise caused the yuan to either appreciate or depreciate relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the yuan to the dollar. Many economists contend that for the first several years of the peg, the fixed value was likely close to the market value. But in the past few years, economic conditions have changed such that the yuan would likely have appreciated if it had been floating. The sharp increase in China's foreign exchange reserves (which grew from $403 billion in 2003 to $1.95 trillion as of March 2009) and China's large trade surplus with the world ($297 billion in 2008) are often viewed by critics of China's currency policy as proof that the yuan is significantly undervalued."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2009-04-13
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China and the Global Financial Crisis: Implications for the United States [April 2, 2009]
This Congressional Research Service (CRS) report discusses China and the financial crisis. "Over the past several years, China has enjoyed one of the world's fastest growing economies and has been a major contributor to world economic growth. However, the current global financial crisis threatens to significantly slow China's economy. Several Chinese industries, particularly the export sector, have been hit hard by crisis, and millions of workers have reportedly been laid off. This situation is of great concern to the Chinese government, which views rapid economic growth as critical to maintaining social stability. China is a major economic power and holds huge amounts of foreign exchange reserves, and thus its policies could have a major impact on the global economy. For example, the Chinese government in November 2008 announced plans to implement a $586 billion package to help stimulate the domestic economy. If successful, this plan could also boost Chinese demand for imports. In addition, in an effort to help stabilize the U.S. economy, China might boost its holdings of U.S. Treasury securities, which would help fund the Federal Government's borrowing needs to purchase troubled U.S. assets and to finance economic stimulus packages. However, some U.S. policymakers have expressed concerns over the potential political and economic implications of China's large and growing holdings of U.S. Government debt securities. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-04-02
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China-U.S. Trade Issues [March 31, 2009]
"U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.-China trade has risen from $5 billion in 1980 to $409 billion in 2008. In 2008, China was the second largest U.S. trading partner, its third largest export market, and its biggest source of U.S. imports. About 12% of total U.S. global trade is now with China. According to U.S. data, U.S. firms have invested around $28 billion in China (through 2007), some of which is aimed at the Chinese domestic market, while other investment has gone into export-oriented manufacturing facilities. With a huge population and a rapidly expanding economy, China is a potentially huge market for U.S. exporters. However, bilateral economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China ($266 billion in 2008), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies (such as subsidies) and other practices deemed unfair and/or harmful to various U.S. economic sectors, and its failure in some cases to ensure that its exported products meet U.S. health and safety standards. […] This report examines major U.S.-China trade issues and related legislation, and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-03-31
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China's Holdings of U.S. Securities: Implications for the U.S. Economy [March 5, 2009]
"Given its relatively low savings rate, the U.S. economy depends heavily on foreign capital inflows from countries with high savings rates (such as China) to help promote growth and to fund the federal budget deficit. China has intervened heavily in currency markets to limit the appreciation of its currency, especially against the dollar. As a result, China has become the world's largest and fastest growing holder of foreign exchange reserves (FER). China has invested a large share of its FER in U.S. securities, which, as of June 2008, totaled $1,205 billion, making China the 2nd largest foreign holder of U.S. securities (after Japan). These securities include long-term (LT) Treasury debt, LT U.S. agency debt, LT U.S. corporate debt, LT U.S. equities, and short-term debt. U.S. Treasury securities are issued to finance the federal budget deficit. Of the public debt that is privately held, about half is held by foreigners. As of December 2008, China's Treasury securities holdings were $727 billion, accounting for 23.6% of total foreign ownership of U.S. Treasury securities, making it the largest foreign holder of U.S. Treasuries (replacing Japan in September 2008). [...]The issue of China's large holdings of U.S. securities is part of a larger debate among economists over how long the high U.S. reliance on foreign investment can be sustained, to what extent that reliance poses risks to the economy, and how to evaluate the costs associated with borrowing versus the benefits that would accrue to the economy from that practice. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2009-03-05
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China's Economic Conditions [March 5, 2009]
This report provides an overview of China's economic development, challenges China faces to maintain growth, and the implications of China's rise as a major economic power for the United States. From the Summary: "China's economy and its economic policies are of major concern to many U.S. policymakers. On the one hand, U.S. consumers, exporters, and investors have greatly benefited from China's rapid economic and trade growth. China's large holdings of U.S. securities have helped keep U.S. interest rates relatively low. Many analysts hope that China will make positive contributions to a global economic recovery. On the other hand, the surge in U.S. imports of Chinese products has put competitive pressures on various U.S. industries. Many U.S. policymakers have argued that China maintains a number of economic policies that violate its commitments in the World Trade Organization and/or are harmful to U.S. economic interests, such as its currency policy. Concerns have also been raised over China's rising demand for energy and raw materials (and the impact of that demand has on world prices), increased pollution levels, China's growing FDI [foreign direct investment] (such as in energy and raw materials) around the world, including countries where the United States has political and human rights concerns, and the potential implications of China's large holdings of U.S. debt. The global economic crisis has also raised concerns over the future pace of Chinese economic reforms."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-03-05
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China-U.S. Trade Issues [March 4, 2009]
This CRS report examines major U.S.-China trade issues. "U.S.-China economic ties have expanded substantially over the past several years. Total U.S.-China trade, which totaled only $5 billion in 1980, rose to $387 billion in 2007. China overtook Japan to become the third largest U.S. export market, and overtook Canada to become the largest source of U.S. imports. With a huge population and a rapidly expanding economy, China is a potentially huge market for U.S. exporters. However, U.S.-China economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China (which hit $256 billion in 2007), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies and other practices deemed unfair and/or harmful to various U.S. economic sectors, and failure to ensure that its exports to the United States meet U.S. health and safety standards."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2009-03-04
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China's Holdings of U.S. Securities: Implications for the U.S. Economy [Updated January 13, 2009]
This updated CRS report "examines the importance to the U.S. economy of China's investment in U.S. securities, as well as U.S. concerns over the possibility that China might unload a large share of those holdings, the likelihood that this would occur, and the potential implications such action could have for the U.S. economy. The report concludes that a large sell-off of Chinese Treasury securities holdings could negatively affect the U.S. economy, at least in the short-run. As a result, such a move could diminish U.S. demand for Chinese products and thus could lower China's economic growth as well. The issue of China's large holdings of U.S. securities is part of a broader question that has been raised by many economists: What are the implications of the heavy U.S. reliance on foreign investment to maintain healthy economic growth and to finance the budget deficit?"
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2009-01-13
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Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview [Updated November 13, 2008]
"China is a major source of U.S. imports of consumer products (such as toys) and an increasingly important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and other products imported from China over the past year or so have raised concern in the United States over the health, safety, and quality of imported Chinese products. This report provides an overview of this issue and implications for U.S.-China trade relations and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-11-13
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China's Economic Conditions [Updated November 3, 2008]
"Since the initiation of economic reforms 30 years ago, China has become one of the world's fastest-growing economies. From 1979 to 2007 China's real gross domestic product (GDP) grew at an average annual rate of 9.8%. Real GDP grew 11.4% in 2007 (the fastest annual growth since 1994). However, China faces a number of challenges, including the fallout from the global financial crisis, widespread government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, pollution, widening income disparities, growing inflationary pressures, and the current global financial crisis. The Chinese government has indicated that it intends, over the coming years, to create a 'harmonious society' that would promote more balanced economic growth and address a number of economic and social issues. Trade and foreign investment continues to play a major role in China's booming economy. From 2004 to 2007, the value of total Chinese merchandise trade nearly doubled. In 2007, China's exports (at $1,218 billion) exceeded U.S. exports (1,162 billion) for the first time. China's imports were $956 billion and its trade surplus was $262 billion (a historic high). Well over half of China's trade is conducted by foreign firms operating in China. The combination of large trade surpluses, foreign direct investment flows, and large-scale purchases of foreign currency have helped make China the world's largest holder of foreign exchange reserves at $1.5 trillion at the end 2007."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-11-03
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China-U.S. Trade Issues [Update October 7, 2008]
This CRS report examines major U.S.-China trade issues. "U.S.-China economic ties have expanded substantially over the past several years. Total U.S.-China trade, which totaled only $5 billion in 1980, rose to $387 billion in 2007. China overtook Japan to become the third largest U.S. export market, and overtook Canada to become the largest source of U.S. imports. With a huge population and a rapidly expanding economy, China is a potentially huge market for U.S. exporters. However, U.S.-China economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China (which hit $256 billion in 2007), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies and other practices deemed unfair and/or harmful to various U.S. economic sectors, and failure to ensure that its exports to the United States meet U.S. health and safety standards."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-10-07
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China's Economic Conditions [Updated September 16, 2008]
"Since the initiation of economic reforms in 1979, China has become one of the world's fastest-growing economies. From 1979 to 2007 China's real gross domestic product (GDP) grew at an average annual rate of 9.8%. Real GDP grew 11.4% in 2007 (the fastest annual growth since 1994). While China is expected to continue to enjoy rapid economic growth in the years ahead and could become the world's largest economy within a decade or so, it faces a number of challenges, including widespread government corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, pollution, widening income disparities, and growing inflationary pressures, to name a few. The Chinese government has indicated that it intends, over the coming years, to create a 'harmonious society' that would promote more balanced economic growth and address a number of economic and social issues. […] This report provides an overview of China's economic development, challenges China faces to maintain growth, and the implications of China's rise as a major economic power for the United States. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-09-16
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China's Economic Conditions [Updated August 7, 2008]
This CRS report "provides an overview of China's economic development, challenges China faces to maintain growth, and the implications of China's rise as a major economic power for the United States. This report will be updated as events warrant." Furthermore, the report talks about "how China's economy continues to be a concern to many U.S. policymakers. On the one hand, U.S. consumers, exporters, and investors have greatly benefitted from China's rapid economic and trade growth. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on various U.S. industries. Many U.S. policymakers have argued that China often does not play by the rules when it comes to trade and they have called for greater efforts to pressure China to fully implement its World Trade Organization (WTO) commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency policy, its use of subsidies to support state-owned firms, trade and investment barriers to U.S. goods and services, and failure to ensure the safety of its exports to the United States. Concerns have also been raised over China's rising demand for energy and raw materials, its impact on world prices for such commodities, increased pollution levels, and efforts China has made to invest in energy and raw materials around the world, including countries (such as Iran and Sudan) where the United States has political and human rights concerns."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-08-07
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Future Role of U.S. Trade Policy: An Overview [Updated July 24, 2008]
From the Summary: "The United States has become increasingly integrated with the rest of the world economy. This integration has offered benefits and presented challenges to U.S. business, agriculture, labor, and consumers. Those who can compete in the more integrated economy have enjoyed opportunities to broaden their success, while those who are challenged by increased foreign competition have been forced to adjust and some have exited the market or relocated overseas. Some observers contend that, in order to remain globally competitive, the United States must continue to support trade liberalization policies, while assisting those hurt by trade. Others have raised doubts over whether free trade policies benefit the U.S. economy (e.g., some blame such policies for the large U.S. trade deficit, declining wages, and growing income disparity). Many contend that trade liberalization works only when everyone plays by the rules and have urged the aggressive enforcement of U.S. trade laws to address unfair trade practices. Still others maintain that such issues as labor rights, the environment, and climate change should be linked to trade policies. These competing views are often reflected in the struggle between Congress and the Executive branch in shaping U.S. trade policy. This report provides an overview and background on the debate over the future course of U.S. trade policy and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Cooper, William H., 1949-
2008-07-24
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China's 'Hot Money' Problems [July 21, 2008]
"China has experienced a sharp rise in the inflow of so-called 'hot money,' foreign capital entering the country supposedly seeking short-term profits, especially in 2008. Chinese estimates of the amount of 'hot money' in China vary from $500 billion to $1.75 trillion. The influx of 'hot money' is contributing to China's already existing problems with inflation. Efforts to reduce the inflationary effects of 'hot money' may accelerate the inflow, while actions to reduce the inflow of 'hot money' may threaten China's economic growth, as well as have negative consequences for the U.S. and global economy. This report will be updated as circumstances warrant."
Library of Congress. Congressional Research Service
Martin, Michael F.; Morrison, Wayne M.
2008-07-21
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Future Role of U.S. Trade Policy: An Overview [Updated July 14, 2008]
"The United States has become increasingly integrated with the rest of the world economy. This integration has offered benefits and presented challenges to U.S. business, agriculture, labor, and consumers. Those who can compete in the more integrated economy have enjoyed opportunities to broaden their success, while those who are challenged by increased foreign competition have been forced to adjust and some have exited the market or relocated overseas. Some observers contend that, in order to remain globally competitive, the United States must continue to support trade liberalization policies, while assisting those hurt by trade. Others have raised doubts over whether free trade policies benefit the U.S. economy (e.g., some blame such policies for the large U.S. trade deficit, declining wages, and growing income disparity). Many contend that trade liberalization works only when everyone plays by the rules and have urged the aggressive enforcement of U.S. trade laws to address unfair trade practices. Still others maintain that such issues as labor rights, the environment, and climate change should be linked to trade policies. These competing views are often reflected in the struggle between Congress and the Executive branch in shaping U.S. trade policy. This report provides an overview and background on the debate over the future course of U.S. trade policy and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Cooper, William H., 1949-
2008-07-14
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China's Economic Condition [Updated June 27, 2008]
"This report provides an overview of China's economic development, challenges
China faces to maintain growth, and the implications of China's rise as a major
economic power for the United States. [...] China's economy continues to be a concern to many U.S. policymakers. On the one hand, U.S. consumers, exporters, and investors have greatly benefitted from China's rapid economic and trade growth. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on various U.S. industries. Many U.S. policymakers have argued that China often does not play by the rules when it comes to trade and they have called for greater efforts to pressure China to fully implement its World Trade Organization (WTO) commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency policy, its use of subsidies to support state-owned firms, trade and investment barriers to U.S. goods and services, and failure to ensure the safety of its exports to the United States. Concerns have also been raised over China's rising demand for energy and raw materials, its impact on world prices for such commodities, increased pollution levels, and efforts China has made to invest in energy and raw materials around the world, including countries (such as Iran and Sudan) where the United States has political and human rights concerns."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-06-27
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China-U.S. Trade Issues [Update July 15, 2008]
"This report examines major U.S.-China trade issues and will be updated as
events warrant. U.S.-China economic ties have expanded substantially over the past several years. Total U.S.-China trade, which totaled only $5 billion in 1980, rose to $387 billion in 2007. China overtook Japan to become the third largest U.S. export market, and overtook Canada to become the largest source of U.S. imports. With a huge population and a rapidly expanding economy, China is a potentially huge market for U.S. exporters. However, U.S.-China economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China (which hit $256 billion in 2007), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies and other practices deemed unfair and/or harmful to various U.S. economic sectors, and failure to ensure that its exports to the United States meet U.S. health and safety standards."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-06-15
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China's Currency: Economic Issues and Options for U.S. Trade Policy [May 22, 2008]
"The continued rise in China's trade surplus with the United States and the world, and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by Chinese imports have led several Members to call for a more aggressive U.S. stance against certain Chinese trade policies they deem to be unfair. Among these is the value of the China's currency (the renminbi or yuan) relative to the dollar. From 1994 to July 2005, China pegged its currency to the U.S. dollar. On July 21, 2005, China announced it would let its currency immediately appreciate by 2.1% and link its currency to a basket of currencies (rather than just to the dollar). Although the yuan has appreciated 16% since 2005, many Members complain that China continues to 'manipulate' its currency in order to gain an unfair trade advantage, resulting in U.S. job loss. Numerous bills have been introduced to induce China to adopt a more flexible currency policy. […] Critics of China's currency policy contend that the large and growing U.S. trade deficit with China ($256 billion in 2007) is evidence that the yuan is undervalued and harmful to the U.S. economy. However, the relationship is more complex. First, an increasing level of Chinese exports are from foreign-invested companies in China. Second, the deficit masks the fact that China has become one of the fastest growing (and is now the third largest) market for U.S. exports. Finally, the trade deficit with China accounted for 29% of the sum of total U.S. bilateral trade deficits in 2007, indicating that the overall U.S. trade deficit is not caused by the exchange rate policy of one country, but rather the shortfall between U.S. saving and investment. That being said, there are a number of reasons why a more flexible currency policy could benefit both countries. For a brief summary of this report, see CRS [Congressional Research Service] Report RS21625, 'China's Currency: A Summary of the Economic Issues.'"
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2008-05-22
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China's Holdings of U.S. Securities: Implications for the U.S. Economy [Updated May 19, 2008]
This CRS report addresses an important issue which has major implications for the U.S. Economy and that is foreign investment in the U.S. market. More specifically, this report is focusing on China, which has "high savings rates" and its "holdings of U.S. Securities." Furthermore, "this report examines the importance to the U.S. economy of China's investment in U.S. securities, as well as U.S. concerns over the possibility that China might unload a large share of those holdings, the likelihood that this would occur, and the potential implications such action could have for the U.S. economy. The report concludes that a large sell-off of Chinese Treasury securities holdings could negatively affect the U.S. economy, at least in the short-run. As a result, such a move could diminish U.S. demand for Chinese products and thus could lower China's economic growth as well. The issue of China's large holdings of U.S. securities is part of a broader question that has been raised by many economists: What are the implications of the heavy U.S. reliance on foreign investment to maintain healthy economic growth and to finance the budget deficit?"
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2008-05-19
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China's Economic Conditions [Updated May 13, 2008]
"This [CRS] report provides an overview of China's economic development, challenges China faces to maintain growth, and the implications of China's rise as a major economic power for the United States. This report will be updated as events warrant." Additional information suggests that "China's economy continues to be a concern to many U.S. policymakers. On the one hand, U.S. consumers, exporters, and investors have greatly benefited from China's rapid economic and trade growth. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on various U.S. industries. Many U.S. policymakers have argued that China often does not play by the rules when it comes to trade and they have called for greater efforts to pressure China to fully implement its World Trade Organization (WTO) commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency policy, its use of subsidies to support state-owned firms, trade and investment barriers to U.S. goods and services, and failure to ensure the safety of its exports to the United States. Concerns have also been raised over China's rising demand for energy and raw materials, its impact on world prices for such commodities, increased pollution levels, and efforts China has made to invest in energy and raw materials around the world, including countries (such as Iran and Sudan) where the United States has political and human rights concerns."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-05-13
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Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview [Updated May 8, 2008]
From the Summary: "China is a major source of U.S. imports of consumer products (such as toys) and an increasingly important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and other products imported from China over the past year or so have raised concern in the United States over the health, safety, and quality of imported Chinese products. This report provides an overview of this issue and implications for U.S.-China trade relations and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-05-08
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China's Currency: A Summary of the Economic Issues [Updated May 8, 2008]
From the Summary: "Many Members of Congress charge that China's policy of accumulating foreign reserves (especially U.S. dollars) to influence the value of its currency constitutes a form of currency manipulation intended to make its exports cheaper and imports into China more expensive than they would be under free market conditions. They further contend that this policy has caused a surge in the U.S. trade deficit with China and has been a major factor in the loss of U.S. manufacturing jobs. Although China made modest reforms to its currency policy in 2005, resulting in a modest appreciation of its currency many, Members contend the reforms have not gone far enough and have warned of potential legislative action. This report summarizes the main findings CRS [Congressional Research Service] Report RL32165, 'China's Currency: Economic Issues and Options for U.S. Trade Policy', by Wayne M. Morrison and Marc Labonte and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Labonte, Marc
2008-05-08
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Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview [Updated March 20, 2008]
From the Summary: "China is a major source of U.S. imports of consumer products (such as toys) and an increasingly important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and other products imported from China over the past year or so have raised concern in the United States over the health, safety, and quality of imported Chinese products. This report provides an overview of this issue and implications for U.S.-China trade relations and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-03-20
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China's Economic Conditions [Updated March 11, 2008]
From the Summary: "Since the initiation of economic reforms in 1979, China has become one of the world's fastest-growing economies. From 1979 to 2007 China's real gross domestic product (GDP) grew at an average annual rate of 9.8%. Real GDP grew 11.4% in 2007 (the fastest annual growth since 1994). While China is expected to continue to enjoy rapid economic growth in the years ahead and could become the world's largest economy within a decade or so, it faces a number of challenges, including widespread corruption, an inefficient banking system, over-dependence on exports and fixed investment for growth, pollution, widening income disparities, and growing inflationary pressures. The Chinese government has indicated that it intends, over the coming years, to create a 'harmonious society' that would promote more balanced economic growth and address a number of economic and social issues. […] Concerns have also been raised over China's rising demand for energy and raw materials, its impact on world prices for such commodities, increased pollution levels, and efforts China has made to invest in energy and raw materials around the world, including countries (such as Iran, North Korea, and Sudan) where the United States has political and human rights concerns. This report provides an overview of China's economic development, challenges China faces to maintain growth, and the implications of China's rise as a major economic power for the United States. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-03-11
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China-U.S. Trade Issues [Updated March 7, 2008]
"This report examines major U.S.-China trade issues. With a huge population and a rapidly expanding economy, China is a potentially huge market for U.S. exporters. However, U.S.-China economic relations have become strained over a number of issues, including large and growing U.S. trade deficits with China (which hit $256 billion in 2007), China's failure to fully implement its World Trade Organization (WTO) commitments (especially in regards to protection of intellectual property rights), its refusal to adopt a floating currency system, its use of industrial policies and other practices deemed unfair and/or harmful to various U.S. economic sectors, and failure to ensure that its exports to the United States meet U.S. health and safety standards."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-03-07
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China's Currency: Economic Issues and Options for U.S. Trade Policy [Updated March 7, 2008]
"The continued rise in China's trade surplus with the United States and the world, and complaints from U.S. manufacturing firms and workers over the competitive challenges posed by Chinese imports have led several Members to call for a more aggressive U.S. stance against certain Chinese trade policies they deem to be unfair. […]. Numerous bills have been introduced to move China to adopt a more flexible currency policy. If the yuan is undervalued against the dollar […], there are likely to be both benefits and costs to the U.S. economy. It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined. […] It also lowers prices for U.S. firms that use imported inputs (such as parts) in their production, making such firms more competitive. When the U.S. runs a trade deficit with the Chinese, this requires a capital inflow from China to the United States, such as Chinese purchases of U.S. Treasury securities. […] On the negative side, lower priced goods from China may hurt U.S. industries that compete with those products, reducing their production and employment. In addition, an undervalued yuan makes U.S. exports to China more expensive, thus reducing the level of U.S. exports to China and job opportunities for U.S. workers in those sectors. However, in the long run, trade can affect only the composition of employment, not its overall level. Thus, inducing China to appreciate its currency would likely benefit some U.S. economic sectors, but would harm others."
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2008-03-07
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China's Holdings of U.S. Securities: Implications for the U.S. Economy [Updated February 27, 2008]
"Given its relatively low savings rate, the U.S. economy depends heavily on foreign capital inflows from countries with high savings rates (such as China) to help promote growth and to fund the federal budget deficit. China has intervened heavily in currency markets to limit the yuan's appreciation. As a result, China has become the world's largest and fastest growing holder of foreign exchange reserves (FER), which totaled $1.4 trillion as of September 2007. China has invested a large share of its FER in U.S. securities, which, as of June 2006, totaled $699 billion, making China the 2nd largest foreign holder of U.S. securities (after Japan). These securities include Treasury debt, U.S. agency debt, U.S. corporate debt, and U.S. equities. [...] Some U.S. policymakers have expressed concern that China might try to use its large holdings of U.S. securities, including U.S. public debt, as leverage against U.S. policies it opposes. For example, various Chinese government officials are reported to have suggested that China could dump (or threaten to dump) a large share of its holdings to prevent the United States from implementing trade sanctions against China's currency policy. [...] The issue of China's large holdings of U.S. securities is part of a larger debate among economists over how long the high U.S. reliance on foreign investment can be sustained, to what extent that reliance poses risks to the economy, and how to evaluate the costs associated with borrowing versus the benefits that would accrue to the economy from that practice."
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2008-02-27
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How Large is China's Economy? Does it Matter? [February 13, 2008]
"China's rapid economic growth since 1979 has transformed it into a major economic power. Over the past few years, many analysts have contended that China could soon overtake the United States to become the world's largest economy, based on estimates of China's economy on a 'purchasing power parity' (PPP) basis, which attempts to factor in price differences across countries when estimating the size of a foreign economy in U.S. dollars. However, in December 2007, the World Bank issued a study that lowered its previous 2005 PPP estimate of the size of China's economy by 40%. If these new estimates are accurate, it will likely be many years before China's economy reaches U.S. levels. The new PPP data could also have an impact on U.S. and international perceptions over other aspects of China's economy, including its living standards, poverty levels, and government expenditures, such as on the military. This report will not be updated."
Library of Congress. Congressional Research Service
Morrison, Wayne M.; Martin, Michael F.
2008-02-13
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China's Holdings of U.S. Securities: Implications for the U.S. Economy [Updated January 25, 2008]
"Given its relatively low savings rate, the U.S. economy depends heavily on foreign capital inflows from countries with high savings rates (such as China) to help promote growth and to fund the federal budget deficit. China has intervened heavily in currency markets to limit the yuan's appreciation. As a result, China has become the world's largest and fastest growing holder of foreign exchange reserves (FER), which totaled $1.4 trillion as of September 2007. China has invested a large share of its FER in U.S. securities, which, as of June 2006, totaled $699 billion, making China the 2nd largest foreign holder of U.S. securities (after Japan). These securities include Treasury debt, U.S. agency debt, U.S. corporate debt, and U.S. equities. […] Some U.S. policymakers have expressed concern that China might try to use its large holdings of U.S. securities, including U.S. public debt, as leverage against U.S. policies it opposes. For example, various Chinese government officials are reported to have suggested that China could dump (or threaten to dump) a large share of its holdings to prevent the United States from implementing trade sanctions against China's currency policy. […] The issue of China's large holdings of U.S. securities is part of a larger debate among economists over how long the high U.S. reliance on foreign investment can be sustained, to what extent that reliance poses risks to the economy, and how to evaluate the costs associated with borrowing versus the benefits that would accrue to the economy from that practice."
Library of Congress. Congressional Research Service
Labonte, Marc; Morrison, Wayne M.
2008-01-25
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Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview [Updated January 24, 2008]
From the Summary: "China is a major source of U.S. imports of consumer products (such as toys) and an increasingly important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and other products imported from China over the past year or so have raised concern in the United States over the health, safety, and quality of imported Chinese products. This report provides an overview of this issue and implications for U.S.-China trade relations and will be updated as events warrant."
Library of Congress. Congressional Research Service
Morrison, Wayne M.
2008-01-24
