Chimerica is a word that combines the words ‘China’ and ‘America’. It is a word that was invented to describe the relationship of the two countries who now depend on each other very much.
China depends on America to buy things from Chinese factories. Americans have a lot more money than Chinese so there are bigger profits in selling to the Americans. Many products made in China for Americans are not available to most Chinese because Americans will pay higher prices. American money is creating good jobs for hundreds of thousands of Chinese workers. Many Chinese people have left the countryside to work in factories so they can get higher pay and have a better life.
America depends on China to make things at a lower cost than Americans would charge. Chinese workers are paid much less than American workers doing the same job. This results in lower prices for Americans. But Americans also depend on China to lend them money to buy Chinese goods. China holds hundreds of billions of US dollars coming into China to purchase Chinese products. China can afford to lend to the US because Chinese people save a lot of money and want to get as much interest money on their savings as possible. Chinese banks buy American debt to get a higher rate of interest than they could get in China or other parts of the world.
So Chimerica describes this dependence of the two countries on each other. These two countries were enemies for over 30 years and the two governments are often uncomfortable with each other. But economically, the two countries are the best of friends and the economies of both countries are tied tightly together.
This relationship has caused problems as well as benefits. Americans are buying less because of the recession. This is causing many Chinese workers to lose their jobs. The Chinese government needs a good economy to keep the Chinese people happy with it. Chinese banks have lost a lot of money from their US investments. This has cost the Chinese government money to make sure that workers savings are safe.
Now that US workers are losing their jobs, many Americans want the US government to slow trade with China and give the jobs to Americans. President Obama will have many things to think about when he takes over this strange but powerful relationship. In many ways, Presidents Obama and Hu Jintao are co-presidents of Chimerica and must consider the needs of both countries.
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