CHINA: The U.S. trade deficit with China swelled to 201 billion U.S. dollars last year.

Record ID: 295033

  • Title: CHINA: The U.S. trade deficit with China swelled to 201 billion U.S. dollars last year.
  • Date: 11th February 2006
  • Summary: (W5) WASHINGTON, D.C., UNITED STATES (FEBRUARY 10, 2006) (REUTERS) (SOUNDBITE) (English) NICHOLAS LARDY, SENIOR FELLOW AT THE INSTITUTE FOR INTERNATIONAL ECONOMICS SAYING "The deficit with China of course has been exacerbated over the last few years by the fact that their currency is increasingly undervalued, that 's why their share of the total deficit has gone up quit
  • Embargoed: 26th February 2006 12:00
  • Keywords:
  • Location: China
  • Country: China
  • Topics: International Relations,Economic News
  • Reuters ID: LVA36V76PRB9ZLMX7JUGNUUMAM5G
  • Story Text: The U.S. trade deficit skyrocketed in 2005 to a record 725.8 billion U.S. Dollars (USD), as American companies and consumers snapped up record levels of low-priced goods from China and high-priced oil from the Middle East, a U.S. government report on Friday (February 10) showed.
    The trade deficit, which has risen more or less steadily since 1991 when it was 30.7 billion USD, widened 17.5 percent in 2005 to set a record for the fourth year in a row.
    A huge chunk of the deficit was with China. The trade shortfall with the country increased 24.5 percent to a record 201.6 billion USD. Imports of consumer and industrial goods like clothing, computers, televisions, toys, furniture, chemicals and engines from China hit a record 243.5 billion USD, swamping record U.S. exports to China of 41.8 billion USD.
    The trade deficit has sparked cries from several members of congress. They are calling on China to raise the value of its currency and take other steps to open its market to more U.S. goods.
    On Thursday, two senators proposed downgrading China's trade status to punish Beijing for "cheating" on its trade obligations and manipulating its currency but the Bush administration said the punishment would hurt the United States as well.
    Senators Byron Dorgan, a North Dakota Democrat, and Lindsey Graham, a South Carolina Republican, said Congress should revoke legislation that cleared the way for China to join the World Trade Organisation in 2001. Instead of maintaining permanent normal trade relations, known as PNTR, the United States should go back to evaluating trade relations with China every year, they said.
    Dorgan said "We call this PNTR, permanent normal trade relationship. With China there is nothing normal about this at all. There is nothing normal about a trade relationship that causes these kinds of deficits."
    They also complain that Beijing keeps the value of its currency artificially low for a trade advantage and does little to stamp out the piracy and counterfeiting that cost American companies billions of dollars in sales each year.
    Nicholas Lardy, a Senior Fellow at the Institute for International Economics in Washington told Reuters on Friday (February 10) "I think we have to continue to work with the Chinese to encourage them to see that in the long term, it is in their interest to have more flexible exchange rate. That's a long-term educational process. I think the Treasury Department has made some progress, but obviously, not enough."
    China was the fastest-growing U.S. export market in 2004 and will probably repeat its status for 2005.
    amrep/jrc
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