Nearly Half of China’s Export-oriented Factories are owned by American and other foreign MNCs and this reality is bring a discussion to front that does such kinds of patterns have any role in the U.S. trade deficits? Few people thinks so but a large section have different view.The US trade deficits cannot be purely blamed on the American Multinational Corporations that operates from China and export their products back to the US. Obviously these MNCs are increasing the trade deficit for the US. These corporations are operating from China because of the cost advantage that Chinese market offers. This implies that the US has been importing more than its exports. It imports lots of products from across the world and all these imports have contributed to the trade deficits of the US. So its bilateral trade relationships with other economies also have huge impact on the deficit. But yes these MNCs operating in China have the biggest contribution towards the deficit.
MNCs in China and the US Trade Deficit