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US aims at cutting China down to size

The US is thinking of rejoining TPP.
The reason is that eight member countries of TPP out of 12 members are largely dependent on imports from China. The US hopes they will clamor for American support to dampen Chinese exports.

China is an export based economy. Trade accounts for 37 per cent of its GDP. China depends substantially on TPP for its exports. TPP accounts for 49 per cent of China’s global trade.

The eight member countries of TPP, which are the concentration of China’s exports, are USA, Japan, Vietnam, Singapore, Malaysia, Australia, Mexico and Canada. They accounted for 97 per cent of China’s exports to TPP in 2015. China’s substantial exports to these countries created the big trade deficits of these countries.

The major components of China’s basket of exports to these eight member countries were electric and mechanical machinery and equipment. Nearly one-fourth of Chinese exports to Japan relate to electrical machinery and equipment. In the case of Vietnam, the share was 35 per cent in 2015.

This means that to wean away Chinese predominance in these countries, the US has to supplant Chinese exports of electrical and mechanical machinery by offering competitive pricing after reaping the benefits of low or no tariffs in the region.

 
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