Research of the Surplus in Sino-US Trade based on Comparative Advantag

Mengchen Yu
2016 Proceedings of the 2016 International Conference on Economy, Management and Education Technology   unpublished
In Sino-US trade, Chinese exports to the United States is in rapid growth is entirely due to China's labor comparative advantage. Growth of Sino-US trade surplus is related to the influx of foreign capital into China, China's domestic consumer insufficient and the related technology products export control on China. In order to fundamentally solve the problem of Sino-US trade surplus, joint efforts of both sides of China and the United States is required. The comparative advantage theory
more » ... e comparative advantage theory In his representative work The Wealth of Nations published in 1776, Adam Smith first proposed the absolute comparative advantage theory. In the book, Smith analyzed the benefits of free trade in detail and advocated free trade. Every country trades according to the absolute comparative advantage theory. As long as countries export its absolute production cost is lower than other countries' products in the international market, the welfare of the two countries have been increased. If foreign can give us manufacture goods more cheap than our own, we had better use we have the advantage industry, produce goods to buy these goods. The advantage of a country can have two sources: one is the natural advantages and the other is later advantage. [1]Smith thought that every country has its absolute advantage suitable for the production of certain products; the specialized production of its products at lower production costs and exchange products is good to participate in the exchange of all nations. Relative comparative advantage theory Adam Smith's theory of absolute cost has opened up the international trade theory research, which is also the beginning of the theory of comparative advantage. Smith thought all countries exchange commodity with absolute low cost can increase the production of products and consumption quantity will increase, so both sides get interests. But it makes the absolute inferiority in all products production country unable to participate in international trade. David Ricardo broke through the limitations of Smith's absolute advantage theory and put forward his relative comparative advantage theory. He illustrated through the establishment of a simplified model that even if a country has no absolute advantage, it still can benefit through comparative advantages in international trade. In this classic models, including the following assumptions: a kind of elements, two kinds of goods, constant return to scale, constant Labor productivity, relative labor productivity are different between the two countries. [2]By the model, the allocation of resources guided by price system under the condition of free trade, its different the ratio of the product cost comparing with the state department of product cost ratio, as long as the cost difference, the ratio of between different countries can also inevitably to carry on the exchange so as to get economic interests. Ricardo's comparative advantage says that comparative advantage is produced in labor productivity difference between countries, and this results labor cost difference. Research on the effects of the RMB exchange rate on China's trade surplus Calculation of the real exchange rate Research on the calculation of the real exchange rate system is rare and lack of system theory. According to the research literature on exchange rate, the definition of the real exchange rate is
doi:10.2991/icemet-16.2016.446 fatcat:dkuqwuzlwjf5xccxwinysfmr6i