Commentary 3 - Body

Commentary 3 - Body - 11/2/2010 Gaith Kalai IB Economics...

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11/2/2010 Gaith Kalai IB Economics HL2 Commentary Number 3 – Draft 2 As the title of the article implies, Sino-U.S trade relations are becoming increasingly unequal in the sense that the U.S is suffering from a widening trade gap. A trade gaps is defined as the amount by which the value of a country's visible imports exceeds that of visible exports which results in an unfavorable balance of trade. This trade gap is contrasted with a surplus in China’s trade balance. A trade surplus occurs when the value of a country's exports is greater than the value of its imports. This situation, when viewed from an exchange rate-exports perspective could explain the differences in value between the U.S dollar and the Chinese Yuan. China has been using policies to depreciate or undermine the value of the Yuan in order to increase Chinese exports. Currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies. Inversely, the U.S has been noticing the negative reprucussions in terms of trade of such a policy in many forms, such as a widening trade
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This document was uploaded on 10/26/2011 for the course PLIR 2050 at UVA.

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Commentary 3 - Body - 11/2/2010 Gaith Kalai IB Economics...

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