In this Business English News lesson: we take a look at the economic prospects for the USA and China.
The relationship between the world’s two biggest economies is sure to undergo some major changes in the months ahead. With Obama set to remain in the White House for 4 more years, and Xi Jinping moving in to Zhongnanhai for the next decade, all eyes will be on how the new faces work together amid these tough economic times.
Hello and welcome back to Business English Pod, my names is Nigel and I will be your host for today’s Business News lesson on the prospects for the US and Chinese economies.
The relationship between the world’s two biggest economies is sure to undergo some major changes in the months ahead. With Obama set to remain in the White House for 4 more years, and Xi Jinping moving in to Zhongnanhai for the next decade, all eyes will be on how the new faces work together amid these tough economic times. From People’s Daily:
This will be the start of a new political cycle that will be of tremendous global importance, as the evolution of bilateral relations will to a considerable extent determine the pace of the world’s economic recovery, the response to global issues, and whether there is peace and stability in the Asia-Pacific region.
US trade with “The Middle Kingdom” dates back to the early 1800s, with products including silk, tea, and opium being peddled around the world. In 2011, imports and exports between the two were a whopping $500B, resulting in a trade deficit with the US of nearly $300B. This trade gap has been a source of tension in Sino-American relations over the years and, as Bloomberg reports, could lead to some big changes in the future:
“Protectionist sentiments are running high, with recent U.S. complaints filed with the World Trade Organization and passage in March of a countervailing tariff bill. Such measures have been accompanied by a familiar chorus calling for a major revaluation of the Yuan to counteract China’s alleged currency manipulation intended to keep its exports cheap.”
China has maintained that the Renminbi has appreciated by 33% since 2007, and if the rest of the world is getting richer, they’re entitled to the same benefits. Donald Gross, author of “The China Fallacy” points out that America’s tendency to point the finger is simply a way for them to pass the buck:
“They’re scapegoating China to shift blame to foreigners for America’s serious economic problems. They’re actually exploiting the vulnerabilities, the insecurities that many Americans have about the economy and about the future.”
Since the Recession began in 2008, these economic superpowers have faced numerous difficulties. Today, with talk of the US approaching a fiscal cliff and China’s threat of a hard landing, economic recovery around the globe continues to be sluggish at best. This slippery slope could lead to ominous days ahead if decisions aren’t made soon, as the Globe and Mail reports:
“If the European debt crisis deepens, China’s landing turns out to be a lot harder than forecast, and U.S. politicians somehow walk off that fiscal cliff on Jan. 1 – all plausible outcomes, based on past performance – the world would most certainly slide back into the economic quicksand.”
With global uncertainty making for jittery market conditions, woes in the Eurozone have significantly impacted both China and America. However, frustrations with Europe’s inaction are starting to appear, as Jin Liqun, chairman of China Investment Corporation, tells the Guardian:
“The way the Eurozone has handled the debt-resolution issue has been more problematic. Too much time has been wasted on debates over the terms and conditions of piecemeal bailouts. Political leaders have been digging in on their own agendas, with their objectives pulling in different directions.”
With the Chinese economy ramping up in the years ahead, and set to surpass the US in the next decade, collaboration between the two countries will be paramount to global prosperity. Hillary Clinton summed up the sentiment with a goodwill message to mark China’s National Day on October 1st:
“As we continue to expand our work on the consequential issues of our time, we must continue to build on this historic opportunity to deepen our relationship, because a thriving China is good for America and a thriving America is good for China.”