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Imports from China, Numbers Please

Sunday, 03 October 2010 20:59

The NYT discussed the issues involved in currency pricing and trade protection with reference to China and other countries. The article raised concerns that growing protectionism could hurt economic growth, but it never noted that most highly educated professionals already benefit from extensive protectionism. The inequality resulting from their protection is one of the key factors motivating protectionist sentiments in the United States.

It also raises the prospect that a higher valued yuan would seriously damage China's economy. It would have been helpful to note the importance of China's exports to the U.S. to its economy. China's good exports to the U.S. are approximately equal to 6 percent of its GDP. Even a sharp rise in the yuan is unlikely to reduce its exports by more than one-third (2 percent of GDP) over a 2-year period. This is currently equal to less than 3 months of growth in China.

It is also worth noting that China's exports to the United States fell by 17.4 percent from the third quarter of 2008 to the third quarter of 2009. China was able to offset the loss of export demand from the United States and elsewhere with a massive stimulus package. As a result, its economy grew by more than 9.0 percent in 2009.

Comments (4)Add Comment
China's export is small to its economy?
written by James, October 04, 2010 1:34
You are saying China's export is relative small to its economy? And any effect from a declining export could be offset by a stimulus.

Isn't that contradict to what you have been saying all these years: "China is not dumb in investing and willing to absorb the loss in their Treasury holdings to prop up the export."

So if the export is small, then your past assessment is wrong?
written by Ohoa, October 04, 2010 2:16
The argument from Mr. Baker seems to be that if China's exports are "small" it is OK that they are brought about by nefarious means such as currency manipulation or under the table export subsidies. Mr. Baker seems to think that it is OK if some manufacturers in the US lose their businesses and livelihoods as long as their numbers are "small". What a despicable argument to make. If Dean Baker wants to side with Chinese mercantilist and predatory practices, he should argue whether they are justified or not, not say that it is Ok because the numbers are small. The numbers are actually not small as the other comment said, but even if they were, it is like saying that calling a beating the tar out of a few people is OK as long as the numbers are small.
written by YTL, October 04, 2010 7:19
China's peg to the US dollar affects more than just its trade with the US. It also affects its trade to every other country on Earth.

Thus, it is odd that you chose to restrict your argument to the % of Chinese GDP that comes only from American trade.

Clearly the dollar/yuan peg is extremely important to the Chinese economy. If it were not then China would have abandoned it long ago.
Trade protection for the doctors lobby is only part of our medical crisis
written by Jorge, October 04, 2010 7:26
Dean frequently mentions how we protect American doctors for foreign competition. He probably is aware of, but doesn't mention, how extensively, how wastefully, we protect them from local competition.

We have also allowed a serious problem of monopoly power for hospitals to develop in this country. Just importing doctors isn't going to help this problem either.

(Of course there is Dean's idea of sharing the saving with those who use hospitals in other countries. That deserves to be explored.)

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.