Understanding China’s Impact on American Consumers

American jobs have moved to China, but consumers benefit from lower costs.

In this Jan. 19, 2011 file photo, President Barack Obama listens as China's President Hu Jintao speaks during a state arrival on the South Lawn of the White House in Washington.
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Both Capp and Gong agree that the biggest misinterpretation of the United States and China's relationship concerns the trade deficit and Chinese holdings of U.S. debt. Currently, the United States owes China $285 billion. At the same time, China holds $1.15 trillion in U.S. bonds.

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Many are concerned that the large trade deficit gives China an advantage over the United States, should the nation demand repayment. The Chinese could also flood the bond market with U.S. treasuries, dramatically shrinking the value of the dollar.

But Gong says neither is likely to happen, since China needs U.S. money to continue to grow. At the same time, the Chinese do want to be paid eventually; sinking the value of the dollar is senseless, according to Gong.

Says Gong: "If we go into a currency war, it would create big problems for both countries."



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