Global+Interdependence+BSAZOV


 * Global Interdependence **

The U.S. receives a large volume of low-cost imports from China and has also gotten help in financing a significant part of its budget and current account deficits. China remains quite dependent on U.S. export markets and continues to look to U.S. Treasury bond markets to park a large portion of its rapidly rising stock of foreign exchange reserves. Over the past year, the U.S. has become less dependent on China’s financing of its deficits. U.S. deficit financing requirement—a budget deficit of about $1.6 trillion in 2010 and prospects of nearly $9 trillion of deficits over the next decade. China is striving to change the importance of the U.S dollar to yans so that the money we owe china looks like a greater amount then it really is. U.S. current account deficit hit $800 billion in 2006, declined slightly in 2007-08. The crisis-induced recession in the U.S. has shrunk the deficit to $370 billion in 2009. China’s current account fell to $284 billion in 2009. China needs currency reform to aid its own economic development as well. Currency reserves topped $2.65 trillion in September. The reason for China's stubbornness is that Beijing fears that a rapidly appreciating currency would undermine the competitiveness of its job-creating export sector and force domestic reforms that could be destabilizing to the economy. Other reasons: China is still really really poor; alleviating that poverty is the sole basis for the legitimacy of the ruling regime, and Chinese leaders are thus terribly afraid of their own, restive populace.

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" The U.S.-China Economic Relationship: Shifts and Twists in the Balance of Power - Brookings Institution ."Brookings - Quality. Independence. Impact. . N.p., n.d. Web. 26 Oct. 2010. "Why China resists currency reform - The Curious Capitalist - TIME.com." The Curious Capitalist - Commentary on the economy, the markets, and business - TIME.com. N.p., n.d. Web. 26 Oct. 2010. .