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US and China economically interdependent


US and China economically interdependent


Theft of intellectual property through counterfeit discs like those that the Chinese authorities regularly shred in front of reporters represent just one of the areas of trade conflict between Beijing and Washington.

The biggest problem for the US is the trade imbalance. China exported $300 billion dollars worth of goods to the states in 2009 – the last year for which figures are available. In the other direction just $70 billion worth of goods went to China.

US direct investment in China was $50 billion against China’s $12 billion in the US.

American manufacturers hope to tap into China’s huge pent-up demand for items like cars as the Beijing government tries to move from growth driven by exports to growth from domestic consumption.

But for the moment exports feed the growth needed to soak up the country’s ever expanding work force.

After the US, China’s neighbours Japan, South Korea, and Taiwan are its biggest trade partners. In Europe only Germany makes it into the top five.

The value of China’s currency, the yuan, remains a big sticking point.

Washington accuses Beijing of keeping it artificially low against the dollar, but cannot push too hard on the issue because of the mutual economic dependence between the two.

After American tax payers, China is the second largest holder of US debt with $900 billion worth of Treasury securities – basically bankrolling Washington’s deficit.

As well as the money that China lends the US so it can keep paying its bills, President Obama needs access to its markets to boost his struggling economy and cut the persistently high unemployment in the US.

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