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Positives for the US Economy

A) Has helped keep inflation within manageable limits

China offers consumers goods at more affordable prices through its enhanced productivity and reduced manufacturing costs. These phenomenally low production costs are attributed to the easily available cheap labor, the massive economy of scale which only a country of the size of China can provide and rapidly improving infrastructural standards.
Thus, China has become the second largest manufacturer in the world right behind U.S. and is expected to be the largest manufacturer in the world by 2007. There has been a deluge of cheap exports which have made their way into the U.S. economy through retailers like Wal-Mart, K-Mart, etc. The cheap goods have in effect prevented inflation from popping its ugly head. Economists also believe that the sourcing of these cheap goods have helped mitigate the harsh effect of the rise in Global Oil prices.

B) Increased Investments, Jobs, etc.

Contrary to the American perception, China's foreign trade is generally in balance. The American public should know this. It means that China is not only an export machine, but also a tremendous market for imports from its major trading partners - the U.S., EU, Japan, and South-East Asia. [For those countries] This has meant jobs, profits to companies, revenue to governments, as well as more choices to customers, both in developed and developing countries.

China has emerged as the resource guzzler of the world. Which also would mean that it has major consumption needs, which are met by resource-rich countries like USA, Middle East, etc.

In producing about 4% of the world's annual GDP, China consumes 10% of the world's electricity, 20% of its copper, 31% of its coal, and some 40% of its cement. In generating every ton of iron and steel, major Chinese iron and steel producers consume 40% more energy than the world average.

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* Contributed by -
Syam Krishna V. K. ,
B.Tech. (Prod. Engg.), Kerala University,
MBA 2007, DOMS, IIT Madras.