Is China Ready To Join The Global Club?

A trading nation is an area where international trade accounts for a large part of its Gross Domestic Product (GDP). A trading nation also has a balanced trade deficit, which is the difference between what the country exports and imports. For example, if a country wishes to sell cars to the United States, it will import cars from China and then export American cars back to China. This is called a “non-exclusive partnership”. However, it is not uncommon for a trading nation to have both a deficit and a surplus.

Trading Nation

In the year 2021, the United States had a surplus of $481 billion dollars and a deficit of $532 billion. Most nations around the world have similar patterns of exporting and importing. When we look at the total value of the imports and exports of all nations, it comes out to be about two hundred trillion dollars. That means that every year, the United States opens up about one hundred billion dollars worth of foreign transactions.

There are many different things that determine the value of a nation’s goods and services. One of these things is the value of the dollar. The other thing that determines the value of a nation’s goods and services is the trading interest rate between two nations. Finally, the other thing that determines the value of a nation’s goods and services is the tariff or quota on exported items between the exporting nation and the importing nation.

If we were to take all of the products that the United States has exported in recent years and total it with the products that it has imported, we would find that the United States has purchased a rather large amount of foreign currency. That currency is used to buy United States bonds, United States treasuries, and other government securities in order to service our current debts. If all of this was not enough to convince you that trading a large amount of foreign currency makes good sense, consider the fact that the United States has traded ten trillion dollars worth of foreign currency during the last ten years. That is over a trillion dollars worth of goods and services that have been purchased by the United States in order to service our debt. In other words, the United States has literally purchased a considerable amount of foreign currency to service our debt.

So, you may be asking, “Well then, why hasn’t China tried to take advantage of this?” China is guilty of stealing intellectual property right and left. They are guilty of dumping cheap goods and services into the United States market. However, the truth is that the United States has already shipped away its goods and services in bulk to China. Moreover, the United States is working on an updated version of the CAE and is eager to announce its intentions to ratify the Comprehensive Economic Trade Agreement (CETA) later this year.

If China wanted to join the trading nations, they would need to develop its own domestic agricultural industries to support its massive industrialization ambitions. In addition to that, the Chinese government could also become a larger partner and help negotiate for lower priced labor. If China were to join the G8, it would become the largest exporter of goods and services to the entire world. This would make China a significant force not only in global trade, but also in global leadership.

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