El Luigy asked in Social ScienceEconomics · 1 decade ago

can someone explain this to me what 232 billion deficit, what's a deficit?

The event's timing spurred immediate skepticism about the sincerity of China's efforts to narrow a trade gap that has tormented the U.S. for years. In two weeks, government leaders will begin talks in Washington on the United States' $232 billion trade deficit with China and other prickly issues

11 Answers

  • 1 decade ago
    Favorite Answer

    A trade deficit means that China holds a whole lot of American currency, which the United States has no Chinese currency to exchange it for.

    What this does, is cause the value of the currency to decline world wide. China will want to either use it, or exchange it back to the United States. That huge deficit would have a devastating effect on the dollar worldwide if it hit the international markets all at once.

    Not having the currency to exchange it for, China will want the best exchange rate they can get, so won't want to destabilize the dollar either. The United States and China will have to come up with some ways to use up the Chinese surplus without devaluing the dollars.

    Also, the reason China has accumulated such a large deficit is probably because first, they use trade tarriffs and sanctions to control the sale of American products in China, for reasons usually involving the protection of domestic industries there. By taxing imports, they keep them overpriced and unmarketable in China.

    Also, American products may just be too expensive to be marketable.

    This creates a one way trade, where we are always buying their products, and they get our currency, while they never buy our products, thus, we have no Chinese currency to exchange for there surplus.

    Basically there will have to be some arrangements made to open trade of American goods in China, and more free trade within China. The problem is that China is a military dictatorship, and the military controls their markets, which means they control pretty much everything.

    So the chance of getting them to agree to free trade in China is not very good.

    One very big problem is that the deficit that large could be used as a weapon against the US by dumping that surplus on the world market at a time critical to US interests in those markets. If we were to go to war against China for instance, and they used that surplus to devalue currency world wide to drive us into a financial crisis.

  • 1 decade ago

    A deficit is when someone is behind on something. For example. The Chicago Bulls were ahead at halftime of game 3 against The Detroit Pistons. The Pistons overcame a deficit of 16 points to win the game. Basically China owes us 232 billion bucks. But we are not gonna see any of that. A bunch of countries owe us money from way back and we are not gonna see any of that money either.

  • 1 decade ago

    A trade deficit is the difference between the value of goods you export, and the value of goods you import.

    Specifically, the USA imports $232 billion more worth of goods from China than China imports from us.

    What this means, in layman's terms, is that every single year, China gets $232 billion dollars richer and the United States gets $232 billion dollars poorer from trade between the two countries alone.

  • 1 decade ago

    China is famous in Europe for their restaurants and because they copy everything they find on their way. Somehow products from China aren´t famous for their quality standards. So the trade gap must be related to politics and not to economics. A good solution for this strange situation is to make China buy things to the USA just at the same time americans develope a plan to diminish the deficit that in fact dosen´t obey to economic reality.

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  • 1 decade ago

    This deficit in trade balance has to do with exports and imports between two countries . If country A exports far more than what it imports from country B ,the balance of trade is positive. If the imports exceed the exports there is a deficit in the trade balance.

  • Anonymous
    1 decade ago

    A trade deficit means that we import $232 billion more from China than we export to China. Basically, we buy alot more crap from them then they do from us.

  • 1 decade ago

    Countries buy and sell goods (or services) with one another. A deficit occurs when a country buys more goods than it sells.

    So if the U.S. sold $100MM in pdts to China and bought $200MM in goods, it would have a $100MM trade deficit with China

  • 1 decade ago

    It is the difference between exports and imports, specifically, the trade deficit = exports - imports.

  • 1 decade ago

    deficit means a "shortage" or "deficiancy"..."lack-of: "short-fall" "absence"

    Means we haven't been doing enough trading that we've fallen into a shortage that is of equal value of $232 billion.

  • Anonymous
    1 decade ago

    A deficit is a loss. Or a negative! :)

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