China’s Threat to the United States Economy

For the last twenty eight years, china has been quick growing into one of the largest economies in the world. china has accomplished this feat, in part, by radically changing their policies on trade and free market interactions with early(a) countries. During this process, mainland China has bought approximately one hundred trillion vaulting horses of unite States debt in the form of Treasury bills, notes, bonds, and Inflation Protected Securities (Amadeo). This debt has given China supplement against the fall in States which has enabled China to constrain the repute of the fall in States dollar high, age keeping the value of the Chinese yuan low.As the inflation of the dollar continues to negatively affect the joined States economy, China has become an sparing superpower. Recently, maintenance has risen that China is a threat to the economy of the United States. China has become a comprehend threat to the United States economy because of the increase trade deficit bet ween the devil countries, the ability to undercut work courts of similar products named in the United States, and the standard of leverage that China has over the United States due to the amount of money that has been lent by the Communist nation.Trade deficits between countries are caused when a country imports to a greater extent(prenominal) goods from one country than they export to that same country. In the case of the United States and China, there is approximately a two hundred and twenty quintuplet meg dollar trade deficit (Prassad). The United States imports nearly lead hundred and cardinal five billion dollars worth of goods and services from China, age exporting only a little more than eighty billion dollars worth of goods and services to the growing economic power (CRS).The disparity in trade between the two countries results in a flooding of Chinese made products that force their United States competitors to lower production costs. In many a(prenominal) cases, lowering production cost of domestic products results in either the ratiocination of these businesses or the outsourcing of jobs. Both of these cause the loss of jobs in the United States. whizz of the reasons that the United States has been unable to lessen the trade deficit is Chinas ability to undercut production costs of similar products made in the United States (Elwell 27) Chinas overall cost of living is ofttimes lower than their United States counterparts (Amadeo).Therefore, they are able to produce goods and hire drive at a much lower price. One of the main reasons for this economic statistic is Chinas population. It is nearly three times that of the United States, heavy(a) China a much larger work force to produce electronics, automobiles, and clothing at a fraction of the United States production cost (CIA). Not only does this negatively affect employment in the United States, but it also impacts their ability to compete on the global market.Industries that impact manufacturing, such as automobiles, computers, and electronics have decreased by thirty 4 percent since 1998 (Prasad). This has a negative effect on the amount of goods that the United States can export. Finally, China has gained a certain amount of leverage bear on the United States economic policies, due in part, to the amount of money that China has loaned the United States. Starting in the early 1980s, every time the value of the dollar would drop, China would buy Treasury bills, notes, bonds, and Inflation Protected Securities to keep the dollar stable in value (Elwell 36).After nearly thirty years of this practice, the United States has come to depend on Chinese loans to conserve its currency value and China has come to own a mass of United States debt. This imbalance of debt has created a number of different scenarios that could bring airless potential policy-making and economic problems for the United States. China could theoretically bullion in their treasuries and bonds tomorrow, which would cause the United States dollar to suffer massive inflation. term this scenario is not necessarily in Chinas best occupy right now, the possibility should concern the United States authorities.Instead, China could use their debt leverage to impact alien trade policies and more importantly domestic political policies that budget how the United States spends its tax dollars (Elwell 22). China has become a perceived threat to the U. S. economy because of the increasing trade deficit between the two countries, their ability to undercut production costs of similar products produced in the United States, and the amount of leverage that China has over the United States due to amount of money that has been lent by China.Although the United States has taken steps to determination the trade deficit, such as convincing China to raise prices on their exports, there is still a considerable gap (Prasad). The United States government continues to print money that th ey simply cant afford, therefore, relying even more heavily on China sustaining the value of their currency. Unless the United States is able to close the trade deficit and regain control of our economic flexibility, the problems caused by foreign countries owning our debt will remain eminent.