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Fiction behind the friction

By Yu Miaojie | China Daily | Updated: 2012-04-19 08:14

Even though trade protectionism does no one any good, China and the United States will experience more trade friction in the months ahead.

China's comparative advantages in manufacturing are the main cause of its trade surplus with the US. The surplus is created through the labor-intensive processing of raw materials, components and parts imported from foreign countries and then selling finished goods to Western countries.

Although the cost of labor in China has been growing in recent years, it is still relatively low, especially when compared with the high cost of labor in the US. China is still a country with abundant human resources, resulting in China's incomparable advantage in low-end manufacturing. In other words, as long as the rule of free trade is followed, China will have a surplus in its trade with the US.

Fiction behind the friction

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