Trading Nation – The Future of International Trade or the Problem of Ancient Disputes?
A trading nation is a nation in which international trade constitutes a high percentage of its gross domestic product. The trading nation’s central bank also acts as a lender and acts as a clearing house for clearing the transactions in its domestic market. It uses interest rates to keep the interest rates of its currency low.
A trading nation has a fixed monetary base. This monetary base is determined by its political system. Trading nations use their money and their exportable goods to make foreign purchases. The central bank of such a nation thus acts as a clearing house and lends its currency to other trading nations in return for its national currency being redeemed. In effect, the foreign country that purchasing the currency of the trading nation from it then acts as a lender to that other country by making the repayments on its currency.
China is the most dominant trading nation in the world today. It has been the largest exporter of goods since the beginning of the industrial revolution in China. At present, China manufactures most of its own exports. Most of these exports are made for other foreign markets. Some of these exports are in the form of commodities and some are in the form of manufactured goods.
China’s growth has led to an increase in the demand for its exports. Many of the European and American companies have started to import China’s goods in order to sell them to their home markets at a cheaper rate. In the past, Chinese exporters used to dominate the international trade in China’s sector of heavy and hazardous chemicals, automobiles and textile products. However, with the rise of global economic slowdown, Chinese exporters are now facing severe problems in their ability to survive in the competitive environment of the global market.
China’s economy has greatly benefited from the current global economic recession. With the recession China’s gross domestic product (GDP) has grown by about 5% annually. This is the biggest increase in the economy of any country in the last 100 years. The greatest advantage that China enjoys by being a trading nation is the enormous merchandise export market that it can access. Other nations around the world are now trying to tap into the huge Chinese consumer market.
The United States has been the largest exporter of goods to China. However, the rapid rise of China as a global economic power has caused the United States to export less to China than before. China has become the fastest growing partner of the European Union in global trade. In order to keep this relationship intact and strengthen our economic position in the world, the United States must continue to re-examine its own national interests and the manner in which it approaches its trade with China and other nations.