From The Perspective Of Factor Endowments Sino-us Trade Imbalance

Over the last few decades, Sino-US trade surplus has expanded year by year. Inthe year2011, China achieved trade balance of$202.34billion in the trade withAmerica. Trade imbalance between the two countries has become more highlightedthan ever before, which will seriously impact economic development and politicalrelations of the two countries. This paper attempts to study the reasons of Sino-UStrade imbalance from the view of factor endowment differences and then put forwardsome countermeasures.The paper studies the imbalance from both theoretical and empirical aspects.Heckscher–Ohlin model is the theoretical base. The paper explains the relationshipbetween H-O theory and Sino-US trade imbalance. From empirical aspect, Leontief’sinput-output method is adopted to measure factor intensity of China and the UnitedStates. Then we find that exports contain more labor and less capital while replacedimports contain less labor and more capital in China, exports contain more capital andless labor while replaced imports contain less capital and more labor in America. RCA(revealed comparative advantage index) is adopted in the analysis of competitiveadvantage of China and America. After the calculation, we find competitive advantageaccords with factor advantage. In the part of empirical study, the paper established anequation of China’s manufacturing unit labor cost advantage towards U.S. andmanufacturing trade balance, by using Johansen Cointegration Test and Granger test,the paper confirms there exists negative correlation between the two. Finally, thepaper does a study on the trend of two countries’(mainly China) factor endowmentdevelopment and thus proposes the corresponding countermeasures.