How China Contributes to a lower Import Price Index for the United States

The United States are running high deficits for years but now it comes to a whole new level when the debt/GDP ratio cross the 100% border. United States is blaming the Chinese for their high trade deficit because the imports from China are almost 4 times as high as the exports to China which lead to more than 2.5 trillion dollars in bilateral debt over the last 10 years. That is why the United States is pushing China to let their currency appreciate which will lead to a more balanced trade. But is that a good idea because the trade with China also have positive points otherwise there would be no trade. This research will show that sectors where China has a great part of the total import the inflation rate is significantly lower than sectors where China only has a small share of the total import of the United States. However this paper will also show that there is not a strong relationship between the growth of the share of Chinese products in a sector and a decrease in the inflation rate. So what the effect is of the share of imports from China for the United States is still unclear but it tends to have some sort of effect on the inflation level.