How Changes in the Value of the Chinese Currency Affect U.S. Imports

摘要

Rapid growth in imports of merchandise from the People's Republic of China over the past decade has posed a challenge for competing U.S. manufacturers. The value of those imports quintupled between 1997 and 2007, rising from $65 billion to $342 billion. By comparison, during the same period, the value of such imports from other countries doubled, growing from $825 billion to $1,664 billion. By 2007, China was the largest supplier of U.S. imports, accounting for 17 percent of all imported manufactured goods. A further indication of the growing competition to manufacturers in the United States and in other countries is that in 2006, Chinas mounting current-account surplus with the world reached $250 billion, or 9 percent of its gross domestic product. Some observers believe that the Chinese government has contributed to growth in U.S. imports by maintaining an undervalued currency. An undervalued Chinese currency would cause the dollar prices of U.S. imports from China to be lower than they would be in a competitive market. Such artificially low prices would benefit U.S. consumers but in the view of many observers would be unfair to U.S. producers whose products must compete with the imports.