Apr 18 2007
Are your parents’ jobs in jeopordy?
Published by Jason Welker at 8:21 pm under Balance of Trade,China,Exchange Rates,Macroeconomics,Protection,Trade
Well, probably not at this moment, but a changing global economy may mean China turns to the US less and less as Europe, Africa and other regions become more important to the Chinese export market.
China Leans Less on U.S. Trade – New York Times
So here’s the perfect article for our last unit in AP Macro! After reading chapter 37, this article should make pretty good sense. The Chinese economy, unsurprisingly, is very dependent on the US as a source for its exports. But as the dollar weakens against the yuan, and Americans erect new barriers to trade, China is turning to other parts of the world to export its output to.
While the European Union has restricted certain imports, particularly shoes, American trade barriers have drawn more attention.
“The U.S. government is still trying to protect its own markets,
unlike Europe, which is very free,†argued Huang Yasong,
international sales manager for the Hubao Group
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About the author: Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course.
Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this authorRelated posts:
just testing to see how to post comments.
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Well it would really depend on what kind of job the parent has wouldn't it. For the most part, I would imagine our parents have high-level jobs, and as such I don't see it being in danger any time soon. Everything in moderation, the US won't overly impose restricted imports and just as such China isn't stupid enough to turn their back on the Unitd States.
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I would agree to Jay's point. It is certainly depend on what kind of job our parents has. If our parents' company is really depend on the resources from the U.S., then this would have effect on our parents' job. However, my father's company is not heavily founded upon the U.S., so I think there will be little effect on my father's job.
P.S. I think jeapordy should be spelled as jeopardy
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Analysis:
China's decreasing independence on trade with America is due to more productive or advantageous trade occurring between other nations. While Europe, Africa, India and other countries around the world have been developing their foreign trade sector, the US economy is not increasing at the same capacity as the rest of the world. The article points out that many Chinese firms would not export to the US due to the US having a weaker currency and other countries offering higher prices. This clearly shows that the rest of the world beating US currency-wise.
This may also be described by looking at equilibrium export and imports. I created a graph that roughly models and compares world trade relative to China. It should be clear then why China prefers to trade with other countries rather than the US:
http://img135.imageshack.us/img135/9707/globalimp…
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Because of the rising currency of Chinese RMB, there would be a higher value of the products that China exports to US (more expensive for US to buy Chinese products). The US' weak currency is causing China exporting less prodcuts to US. With the increasing trade with other countries (Europe, Africa, Middle East, South America and Asia), excluding US, this act is showing the decline of US economy. US economy is no longer at its peak, but rather it is being surpassed by other countries.
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In the past, China had always depended on the United States to export its products, but now, as the U.S currency weakens comparing to RMB, China has shifted its main exports to other nations beside the U.S. This is because once the U.S dollar weakens, it would be more expensive for the people in the U.S to purchase imports from China and also because there are more advantages for China to trade with other nations. This article's main point is that the U.S's economy growth is declining comparing to other nations in Europe, Africa, the Middle East, South America and other in Aisa.
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Good points guys, I agree with you all. As Jay said, it does depend on the job, but unless the United States disappears economically very quickly, our parents fear no threat from losing their jobs. This sounds like an issue much much farther in the future. Just China seems to be not so dependent on the United States anymore doesn't mean they will suddenly not be so effective anymore. This doesn't seem like a problem worth worrying about right now.
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My mom is into buying, selling, and renting houses, thus if there is a decrease in trade between china and the US, the only difference is that there wont be as many 'newly riches' asking for her available house numbers. However, the increase of the value of RMB may increase income for our family ^^
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As chinese currency, RMB is becoming to worth more than it was before, while US doller is weakened, they realize that they no longer need to be dependent on US export, but other countries around the world, such as Europe, Africa and Asia.
Decrease in trade between US and China would not affect the jobs of our parents immediately, but it is possible to influence living in US; as Imported goods from China decreses, price of goods will be increased, while quantity decreases. (Total supply to left)
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The European Union is starting to erect more and more trade barriers against the Chinese as well, especially when it comes to textiles. I doubt that China has anything to worry about, however. China's warming relations with a host of African nations, seen by Hu JinTao's tour of Africa a few months ago, will result in flourishing trade between the two regions. And as African economies slowly begin to build, China could reap incredibly lucrative profits from the relationship.
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interesting observation, linda! not.. just kidding. I'm sure following all this business China has, there's also tons of below the belt stuff that happens. of course, underground economy is never counted so everything is totally underestimated. and tour to africa, of course. people are just tired with work ethics in america i guess. i think protectionism is a sentimental feeling, 'we have to protect our domestic blah blah' while china is all like 'WE DO WHATEVER IT TAKES. WE RUN YOU OVER IF WE MUST' and get in and get out to get what they need
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Neither China nor the US is going to go cold-war on each other any time soon… to do so both countries would sustain huge economic losses (no matter how much China "doesn't need" the US, globalization has got the two in bed together for the foreseeable future…right?)not to mention fall into political turmoil. As for my dad's job– one thing he does is he puts Chinese firms on Nasdaq and as long as CEO's want to buy BMWs and see their stocks skyrocket they're not going to turn their backs on the States, and my dad will still have his job.
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I guess it really depends on their jobs. My dad is currently working in the intelligence industry, or basically whatever industry is in charge of making information chips, etc. It's a small Chinese-based company that just started out, but will aim for international markets as the company grows, so I am sure he has already taken this into consideration when managing the company. This will not become much of a threat to his job.
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If there is a decrease in trade between U.S. and China, it would affect the productivity of my dad's company pretty much. My dad is working for the U.S. food service company in China. Since it is U.S. company trying to make lots of demand from China, it would be tougher for his company to get interest from Chinese firms or Chinese individuals or even other foreign companies trading in China.
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I was actually very impressed with the export and import website that the article referred to, http://www.alibaba.com. It seems like the ultimate user-friendly medium for an up-and-starting merchant–which is exactly what many of the entrepreneurs in China are. I did a little bit of digging to find its origins and discovered that it was created by the Hangzhou businessman, Ma Yun. I think it is quite unique how quickly and effectively the Chinese populous–not just the central government–have taken advantage of world trade and created prosperity through tools such as alibaba.com.
On an even more divergent note, I've also noticed that even non-entrepreneurs among the locales have been able to successfully ride the economic boom through the Chinese stock market. On family and friend lunches, I frequently hear of the suddenly and newly rich, or recent growth in the market.
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If the US Dollar value decreases in relation to Chinese Yuan, US will have to pay more to buy Chinese goods. Also, realizing that Dollar has depreciated, and Yuan has appreciated, China will realize they will not be dependent on US export anymore. Thus, alternative choice goes to countries in other continents. Such decrease in trade between US and China will not affect jobs too much. Also, this matter depends on which kinds of jobs. However, prolonged effect might result in decrease in net export for US, and shifts the domestic aggregate supply curve of US to the left. That would also consequently cause increase in price level and decrease in real GDP.
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