China is well aware of its economic strength, the position in the world it holds, the challenges it will face in coming years and the responsibility on its part to be shared. This huge economic strength has made china an economic power which, now, can manipulate markets accordingly. E.g. China, despite of huge world pressure, is not showing her will to re evaluate its currency. Challenges it going to face are, domestic and international, strategic and economical. Domestic challenges include the inequality in its society where rich is getting richer and poor is getting poorer. International challenges are to keep its status alive in order to maintain its growth in upward direction when more countries are, after the financial crisis, heading towards protectionism. Strategically faced challenges are to protect its marine routes by deploying more military power and to have a close look towards the countries like Saudi Arabia from where she export oil. These all factors are concerned for china itself but the responsibility which it must share with the different states of the world are to re evaluate its currency as to stabilize the other markets, to decrease its trade surplus as to reduce burden on different states. No doubt China is showing its urge to go back to some extent of protectionism but its signs are not seen yet the fact is China is increasing its exports on the expense of its competitors (BBC News, 2010). But keeping currency devalued was not the only reason which affected the world markets, as during the recession, weak buying power of the customers forced them to buy cheap stuff made in China. Elimination of the textile quota in January 2009 also caused the increase in China’s share of the market (The Econoomist, 2010). In contrast with this, EU governments in December 2009, voted to extend the anti-dumping duty on shoes imported from china to protect their local industries (The Econoomist, 2010). On one hand China is seeking more and more world markets while on the other hand it is refusing the European or world companies to operate in more effective way in Chinese markets (Business Day, 2010).
Table 1 describes the status of China-U.S. trade.
Status of China-U.S. trade
Table 1: China's Trade with the United States ($ billion)
Notes: US exports reported on FOB basis; imports on a general customs value, CIF basis
Source: US International Trade Commission
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
US exports 16.3 19.2 22.1 28.4 34.7 41.8 55.2 65.2 71.5 69.6
% change 24.4 18.3 15.1 28.5 22.2 20.6 32.1 18.1 9.5 -2.6
US imports 100.0 102.3 125.2 152.4 196.7 243.5 287.8 321.5 337.8 296.4
% change 22.3 2.2 22.4 21.7 29.1 23.8 18.2 11.7 5.1 -12.3
Total 116.3 121.5 147.3 180.8 231.4 285.3 343 386.7 409.2 366.0
% change 22.6 21.4 21.2 22.8 28 23.3 20.2 12.7 5.8 -10.6
US balance -83.7 -83.0 -103.1 -124.0 -162.0 -201.6 -232.5 -256.3 -266.3 -226.8
(China’s trade surplus was the key issue during the last G-20 meeting)