In this article, the
author discusses the idea of international trade and if China’s track record really
is all that it has been cracked up to be. I thought this would be a worthy article
to share considering we had discussed China’s trading habits and whether or not
their trading poses a threat to the U.S. a few classes ago.
At first the author compares
China trade to their GDP; China’s exports and imports equaled nearly 53% of
their GDP. Seems like a pretty large margin, however, this is still below the
world average. The global trade to world GDP ratio was over 63%. Although China’s
ratio falls below the world average, China still smoke’s the U.S. ratio of 30%
and Brazil’s 26%. Therefore, we must find a measure that can better analyze the
sophistication of what countries are trading and how that compares to rivaling
nations.
Another method to
evaluate a country’s trading is to calculate the amount of “value added” to
create the exports. China adds about 67% of the value to the imports used to
create exports. America, on the other hand, adds 89%. One could argue that
China does not do very much to create the products it exports but instead
imports valuable components. This theory also has its flaws in that it does not
measure a country’s integration with the rest of the world but rather how a
country adds value to its economy through the allocation of parts.
When analyzing trade in
the global economy the goal should be to understand how trade impacts the rest
of the world. We do this not by examining a country’s exports, but by examining
a county’s imports. “Countries export what they must so they can import what
they want.” America is the biggest importer but Hong Kong is the biggest
importer per person. Alternatively, Norway is the country that gets the “most
bang for its import buck.” Because Norway’s currency, krone, is so overvalued
they are able to buy international goods at a better rate than buying goods
domestically. Therefore, China may produce the most for international trade but
this does not mean that their trade is necessarily the most beneficial to the
global economy.
This was a very interesting article which looked into how China's international trade compares to the rest of the world. The one complication with the article is that the assumptions and statistics were all made under international trade of goods, but not services. International trade consists of trading both goods and services. The one mistake the author made was not taking both factors into account. When both were taken into account China ranked 2nd internationally (according to the article). Although I do believe that China has the highest terms of trade compared to everyone else in the world. What do you think about China's terms of trade if you disregard the insights into GDP and "value added"? Are they the biggest contributor to the international economy?
ReplyDeleteThis is an interesting post. You analyze quite a few different things throuought. Personally I like the discussion of value added. It's very interesting how depending on the stage of production products arrive in a country the disparity in the value added can be.It's like the iPhone example from classes between the U.S., Germany, and China.
ReplyDeleteI think the link is an interesting journal that I have read when I prepared my own post article two weeks ago. To my perspective, authors are better to contribute their own opinion instead of merely repeating the content of what they have read for preparation. What’s more, in my opinion, it would make this article more reliable that get more factors involved in.
ReplyDeleteThis was an interesting article. Right away it surprised me that the U.S., China, and Brazil’s GDP are all below the global trade to world GDP ratio of 63%. One would probably just assume that these three are big countries and would be above 63%. This clearly does not portray the sophistication of what countries are trading and how that compares to other countries. There was definitely a lot analyzed in this article. I think that China is the biggest contributor to the international economy, and if they aren’t they are definitely up there. Despite their GDP they are the biggest importer per person, which speaks volumes about how much they are contributing to the international economy.
ReplyDeleteI really like the different perspectives this article takes on assessing trade. My favorite part of the article is the value added to imports. It did not surprise me that America adds 89% to the value of imports to get exports because we tend to import many small components to create the end product that gets exported. Also, I agree with Cole that the article should have focused more on the combination of goods and services. It is evident from the graph in the article that when services are thrown into the mix, the U.S. comes out ahead of China in international trade. In my eyes, services are too big to ignore when comparing trade.
ReplyDeleteThis is a very interesting post. It seems that you can't talk international trade or economics without mentioning China. This is for good reason considering that their population and economy is so large and they have been growing economically at such a large rate. It was good to see an article that related to what we discussed about China in class and it was very interesting to see the facts show that China isn't having such an enormous impact on trade. I feel like many people fear that China has too much trading power but this article proves that this is not really the case.
ReplyDelete