http://useconomy.about.com/od/tradepolicy/p/us-china-trade.htm The following quote is from the above web page
'In 2011, theU.S. trade deficitwithChinawas $295 billion. This was up significantly from the year before, when thetrade deficitwas $273 billion. Both were higher than any prior year.
The U.S. has a trade deficit with China despite the fact that its exports to that country were the highest in history. In 2011, the U.S. exported $103.9 billion in goods, an all-time record. (Exports in 2010 were only $91.9 billion.) However,importsfromChina also set a record -- $399.3 billion, more than the $364.9 billion imported in 2010.
The U.S. imports consumer electronics, clothing and machinery from China. A lot of the imports are from U.S. based companies that send raw materials to China for cheap assembly. When they are shipped back to the U.S., they are called imports even though they are profiting American-owned companies. (Source: U.S. Census,U.S. Trade in Goods With China)
Why Is There a U.S. Trade Deficit with China?:
China is able to produce goods that Americans want at a low cost. Despite the loss in jobs, this is unlikely to change. That's because most people would rather pay as little as possible for computers, electronics and clothing -- even if it means other Americans lose their jobs. That's why the situation is unlikely to change, despite recurrent bills by legislators to imposetariffsor other forms oftrade protectionismwith China.
How does China keep prices so low? Most economists agree that China's competitive pricing is a result of two factors:
1. A lower standard of living, which allows companies in China to pay lower wages to workers.
2. An exchange rate that is partially set to be always priced lower than the dollar.'
