Tags: Chinese Inflation May Ease US Trade Deficit

Chinese Inflation May Ease US Trade Deficit

Monday, 31 Jan 2011 10:07 AM

Rising inflation in China may slow exports and help ease yawning the U.S. trade deficit as American and other Western buyers say "no" to pricier goods, the New York Times reports.

China exports more than $4 of goods to the United States for each $1 it imports, creating a trade surplus of about $275 billion, according to the newspaper.

Yet markups as high as 50 percent on some items have sent some buyers looking to other low-cost producing countries like Vietnam or India despite China's unrivaled manufacturing capacity.

"The trend, if continued, could ease tensions by beginning to limit America’s huge trade deficit with China," the newspaper reports.
It might not be all good news, however.

"Manufacturers and distributors across a range of industries say the likely result of the export slowdown is higher prices for American shoppers in the coming months, and possibly brief shortages of some products if Western retailers delay purchases too long while haggling over prices."

The U.S. has blamed China for keeping its currency artificially low in order to gain an unfair trade advantage, although both sides have said they want to work to ease such tensions.

The U.S. says it wants to increase exports to China, the latter of which says would be a welcome move.

"Our two countries need to sit down and work it out so there won't be such a huge trade deficit and trade surplus," says Chinese Commerce Minister Chen Deming, according to the AFP newswire.

China, meanwhile, says the U.S. should ease restrictions on exports of advanced technology in order to tackle trade imbalances.

"We hope the U.S. can eliminate discriminatory practices against high-tech products into China," Chen says.

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Rising inflation in China may slow exports and help ease yawning the U.S. trade deficit as American and other Western buyers say no to pricier goods, the New York Times reports. China exports more than $4 of goods to the United States for each $1 it imports, creating a...
Chinese Inflation May Ease US Trade Deficit
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2011-07-31
 

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