Causes Of The Formation Of The China-U.S. Trade Imbalance--Review Of 2004 Report To Congress Of The USCC

In June 2004, USCC submitted a report to the Congress. In the report, they declare that the dominant feature of US-China economic relations is the US goods trade deficit with China, and the key factors contributing to the deficit are the undervaluation of the Chinese yuan against the U.S. dollar, China's mercantilist industrial and foreign direct investment policies, and China's refusal to recognize workers' rights which resulted in artificial barriers to wage increases. The thesis is to clarify and address the issues that USCC have shown concerns in the report. The research conducted by Chinese and overseas scholars will be concluded in the first part. The second part will analyze the relationship between the exchange rate of Chinese yuan and China-US trade imbalance, and answer whether Chiese yuan has been undervalued. The third part will analyze the actual cause that has led to China-US trade imbalance. And the conclusion will be drawn in the last part. It has been found in the thesis that the exchange rate of Chinese yuan is not the key factor of China-US trade deficit, the actual cause is the industry transfer under the background of international labor division, China's industrial and investment policy is reasonable and consistent with WTO rule, the low salary of Chinese workers is due to the abundance of labor in the labor market of China.