15. China-U.S. Balance of Trade There is an ongoing debate between the United States and China BLADEs, Inc. CASE Exposure to International Flow of Funds Ben Holt, chief financial officer (CFO) of Blades, Inc., regarding whether the Chinese yuan's value should be revalued upward. The cost of labor in China is sub- stantially lower than that in the United States. a. Would the U.S. balance-of-trade deficit in China be eliminated if the yuan was revalued upward by 20 percent? Or by 40 percent? Or by 80 percent? b. If the yuan was revalued to the extent that it sub- stantially reduced the U.S. demand for Chinese pro- ducts, would this shift the U.S. demand toward the United States or toward other countries where wage rates are relatively low? In other words, would the correction of the U.S. balance-of-trade deficit have a major impact on U.S. productivity and jobs? 15. China-U.S. Balance of Trade There is an ongoing debate between the United States and China BLADEs, Inc. CASE Exposure to International Flow of Funds Ben Holt, chief financial officer (CFO) of Blades, Inc., regarding whether the Chinese yuan's value should be revalued upward. The cost of labor in China is sub- stantially lower than that in the United States. a. Would the U.S. balance-of-trade deficit in China be eliminated if the yuan was revalued upward by 20 percent? Or by 40 percent? Or by 80 percent? b. If the yuan was revalued to the extent that it sub- stantially reduced the U.S. demand for Chinese pro- ducts, would this shift the U.S. demand toward the United States or toward other countries where wage rates are relatively low? In other words, would the correction of the U.S. balance-of-trade deficit have a major impact on U.S. productivity and jobs