Understand Trade With China in 8 Minutes


China is screwing us left and right… I
guess they’re using unfair trading practices to steal our jobs and wreck our economy… probably the American government should do something! if you’re like me you don’t know what exactly China is doing that’s so bad, so let’s find out yeah a trade could be boring but jobs and the economy are kind of a big deal right now so let’s take a journey together… of knowledge and hopefully by the end you’ll know what’s what first what’s the trade deficit and
why is it so important? no one would care what China did if we didn’t trade with them we only care because it’s hurting us, but how? we measure how well trading
works by keeping track of how many things we export to other countries
versus how many we import if we’re exporting more to a country than we’re importing from them we keep some of their money at the end, but if we
regularly import more than we export that country ends up with more of our
money having a trade deficit isn’t always bad–maybe we get more money from
somewhere else and spend it on this country’s cool stuff or maybe we can’t
make stuff fast enough for ourselves and so trade lets us buy more things
and feel richer you can even get a larger trade deficit
while the economy is growing but experts argue about whether trade deficits mean fewer jobs overall worse they generally agree that trade deficits can change what kinds of jobs there are so trade deficits might be one reason why there are fewer factory jobs now other experts say that the way we measure which country gets the value of trade is outdated since now most complicated things are made in several countries which would mean that we aren’t losing as much to China as we think and it’s really robots that are taking our jobs but people talk about the five hundred billion dollar trade deficit with China as a problem so we’ll roll with that–so what’s China
doing that’s supposedly so bad? one, taxes and regulations–supposedly China is either blocking American companies from selling stuff there or putting up a bunch of
roadblocks that no American companies can ever get through even though selling
there is technically allowed or China will have such big taxes on imports that a US company can’t make any money for example foreign cars are taxed here
at 2.5% but at 25% in China so people say that companies build factories in China rather than exporting the stuff from
here– though China’s defense is that some other countries have even bigger taxes on imports, they just don’t trade as much so we don’t care two, state-owned companies China is also accused of cheating because their government often
owns companies competing with American companies then the Chinese company can
get special tax breaks and subsidies that make it tons of extra money China also gives money and assistance to Chinese companies even if the government doesn’t own them this allows Chinese companies to do something called dumping no, not like that–gross dumping is what it’s called when a
company sells large amounts of something, usually a raw material like steel or wood, far below what it cost to buy in that country to force its rivals to lower prices and lose money or keep them high… and lose money a company can afford to do this if it gets lots of free money from its government to be fair China says we also subsidize plenty of our own companies and so does Europe–either we
give the money directly or through tax breaks Three, currency manipulation this doesn’t mean that lame magic trick where someone pretends to pull a quarter out of your ear though it would be awesome if all Chinese economists also had to go to
Magic School currency manipulation is based on exchange rates–the exchange rate is how much of one currency you can get with another–rich countries have really valuable money which is why you can spend like $11 in another country and it counts as 37,000 of their money a government like china can try to affect the exchange rate through a complicated… you’ve fallen asleep haven’t you? fine, just remember that making your own currency less valuable compared to another country’s means that when they buy stuff from you it’s cheaper than it would be otherwise the stuff China makes is already cheap so this makes it even harder for American companies to compete on price in the US–on the flip side, other countries complained when we stimulated our economy through the
Federal Reserve after the 2008 recession for more information on how the Fed did
it, called “quantitative easing” check out the video I made on that–right now China
might be trying to make its currency more valuable to stop economic problems so the manipulation could have solved itself four, stealing technology…with
hackers! for our younger viewers, I’m referencing a historical documentary for the 90s–it was a simpler time Chinese hackers break into the computers at American companies and steal their ideas and technology so they can make
them for cheap but not have to spend anything on research–they can even steal
marketing plans and advertising ideas the companies can’t make too big of a
stink, they say, or they won’t be able to sell anything at all in China the former director of the NSA said that Chinese hackers had hit every major American company we can only guess how much this costs American companies but experts think it’s around 300 to 400 billion dollars a year for comparison’s sake the federal government spent $3.9 trillion in 2016 the Department of Justice thinks it’s cost us more than two million jobs as well the Chinese government or Chinese companies will also just buy companies in other
countries to get their technology or to get an advantage over their rivals–on the bright side it looks like at least the hackers who work directly for the
Chinese government have slowed down since President Obama and his Chinese
President signed an agreement in 2015 though no one knows how much they’ve slowed down or how long it will last so what will President Trump do about this? all of these different complaints have been brought against China either at the
world trade organization, called the WTO or in court–the problem with the WTO is
it is a voluntary thing that the US and China agreed to, so even if we win China
isn’t forced to do anything or maybe they do something but it doesn’t fix the
problem–and we don’t always win plus sometimes we ignore the WTO too like when we lost a case to Brazil in 2014 about money we were paying American
cotton farmers–it’s the same in court cases because the country has to agree
to enforce the ruling we can seize anything that’s in America, like bank accounts, but that would cause its own set of problems: China might start
seizing American companies stuff or put up more barriers to our trade which
would kill jobs the same thing might happen if Trump slaps a big tax on Chinese imports like he’s talked about doing or if Congress passes a law making
it harder for Chinese companies to buy American ones right now the Chinese
government seems to think that we need to be able to sell to them too badly to
make too much of a fuss Trump can try to negotiate a deal that
both sides would agree to since China does need to sell to us too, and they’re
trying to grow their technology industry and if we block them out they can’t do
that some experts also think that China is
trying to avoid a recession which would mean they have more reason to negotiate–the trick is whether we can figure out something that solves everyone’s problems what China’s been doing so far has made them rich after all all and there you have it–as always like and subscribe to know when new videos are coming out if you want to make it easier to know when a new video is up click the little bell icon next to the subscribe button so you get notifications our next video will cover how people pick colleges degrees and jobs and if there are better ways to do that

10 thoughts on “Understand Trade With China in 8 Minutes

  1. So China subsidizes certain manufacturers and industries…just like we do? China enacts taxes on imports to protect Chinese businesses…just like we do? And that's bad when others do to us what we do to others? Um. Can't wait to see how it works out in the long term.

  2. The U.S. does not own manufacturing companies as thy do in China. The U.S. does NOT imposelarge tariffs as China doe. China steals intellectual property. Wake up.

  3. When you lose a game, you call another side, "cheating" Pathetic! China's average GDP growth for the last 30 years is about 9.5% while the US got only 2%. No matter what you say, you lose. Blame your politician, or yourself.

  4. The key question is: are Americans willing to take manufacturing jobs? Do they have the skills and knowledge? Are they able to work hard but earn little?

  5. United States are the master of manipulation and propaganda creating lies against other countries for their own failures they bring it upon themselves spending trillions of dollars yearly to create fake News properganda lies against their own shadows enemies

  6. Piece junk statement from this video, US company made 380billion profits each year in the China market and China only make 20billion in the USA. When Apple contributes more than 10% of trade deficit, make more than 80 percent profit from worldwide market. Trade deficit really should include who is the final owner of products, domestic or foreign companies.

  7. China doesn't follow the rule of law. I say cut them off. It's like playing a game with a Cheater.. They'll rob you blind.

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