In 2002, the US trade deficit with China hit the $100 billion mark. Never before has the United States incurred such a lopsided trade imbalance with another country. It represents more than one-fifth of the global US merchandise trade deficit. The United States takes about 40% of China's worldwide exports; China buys a mere 3% of all US merchandise exports. Within a year or so, if recent trends continue, China will become the US's second-biggest foreign goods supplier, surpassing Mexico and exceeded only by Canada. To make a dent in the bilateral deficit, US exports to China must rise, percentage-wise, at least six times as fast as US imports from China. There is one step that China could take that might alleviate the trade imbalance -- let its currency float on world exchange markets. US business groups are calling on the Bush Administration to press China to stop pegging the Yuan at an artificially low rate. But if the US trade deficit with China keeps mounting and China keeps lagging on promised trade reforms, it could lead to a major blow up in Sino-American trade relations.
 American Wire Producers Association |
