What Is The Us's Little Connection Between The Renminbi And China Trade

There's little connection between the trade balance and the value of the renminbi.

By ZHONG SHAN

Asound and stable China-U.S. economic and trade relationship is more important than ever.

China-U.S. trade and economic cooperation has generated huge and real benefits for the United States, while China has been gaining a lot from it as well. In 2009 China jumped to become the third biggest market for U.S. exports. American companies have cumulatively invested over $62.2 billion in 58,000 projects in China and reaped bumper harvests. Their profits in China amounted to nearly $8 billion in 2008 alone.

Since the outbreak of the international financial crisis, China has been supporting the efforts of the American people to tackle the crisis. On the one hand, China has increased imports from the U.S. While overall U.S. exports dropped 17.9% in 2009, exports to

Without consumer goods from China, the U.S. price index would go up an extra two percentage points every year.

How should we approach the trade deficit, a heated topic in the China-U.S. trade and economic relationship and an issue closely tied to many others?

To start with, Chinese and U.S. interests in bilateral trade are roughly balanced. China-U.S. trade and economic relations include services and investment as well as goods. From 2004 to 2008, the U.S. surplus in services with China grew by a phenomenal 35.4% annually, dwarfing the growth in China's surplus in goods with the U.S.

In 2008, the total sales of American goods in the Chinese market, including goods exported from the U.S. to China, amounted to $224.7 billion, close to the value of goods China exported to the U.S. in 2008, which stood at $252.3. The two countries were almost balanced in terms of sales after adjustment for value-adding freight and insurance