Causes of U.S.-China trade imbalances: a review

Abstract

Purpose

It is a common view to Trump administration and public that devaluation of Chinese currency is the origin of the US trade deficit. However, the previous literature does not support this common view. To better understand the causes of the US trade imbalances with China, this study aims to review the previous literature focusing on the causes of bilateral trade imbalances between the USA and China.

Design/methodology/approach

Review previous literature according to the different reasons that each paper studies.

Findings

Based on the previous literature, the Chinese exchange rate is not the main reason for the US trade imbalances. The official US trade figures overestimate the amount of deficit. The actual causes for the US trade deficit with China perhaps should be the relocation of production to China, low saving in the USA and high saving in China, and the US dollar as the international currency and reserve.

Originality/value

By reviewing previous literature, the authors could better understand the puzzle of the US trade deficit with China.

Citation

Wang, Y. (2020), "Causes of U.S.-China trade imbalances: a review", Journal of Chinese Economic and Foreign Trade Studies, Vol. 13 No. 1, pp. 37-44. https://doi.org/10.1108/JCEFTS-01-2020-0003