An Interesting Approach to Reducing the United States’ Trade Deficit GMAT Reading Comprehension

Reading Passage Question

An interesting approach to reducing the United States’ trade deficit has been suggested: relax export restrictions to China. That this suggestion has come from the President of the People’s Republic of China perhaps warrants some skepticism. That this idea is seconded by U.S. trade groups that represent aerospace, software, and microchip manufacturers, all of whom produce equipment that can be used for military purposes, also gives one pause. Despite some reforms, real and promised, China’s “private” sector is too entangled with a government whose aims and actions are frequently at odds with U.S. policy and ideology.

To expedite “safe” trade with China, the U.S. has recently compiled a list of acceptable Chinese businesses with which our high-tech firms can trade. This replaces a system that required that exporters take the time—sometimes a considerable amount—to get licenses for the items they wished to export. Supposedly, the new system has stringent criteria that ensure that the Chinese firms will only use the imported goods for non-military purposes. Many of these products are, however, dual-purpose; they have military as well as commercial applications. Despite assurances that ground checks will prevent imported goods from being diverted for military purposes, China is simply too big, and the links between its companies and its government agencies too byzantine, for these assurances to be meaningful.

Another area in which trade with China needs to be handled carefully is that of intellectual property. Here, U.S. companies are largely on their own; our government can establish guidelines and issue warnings, but it cannot take a direct part in legal actions pursued by an American firm that believes its patents, trademarks, or copyrights have been violated. This is no small problem. About 20% of all consumer products in the Chinese market are counterfeit. China’s government has taken some steps to address this problem, but these steps have not yet resulted in enough punishment for those who pirate intellectual property to serve as much of a deterrent to others. Furthermore, what the central government promises is one thing; what provincial governments do is another. Corruption, protectionism, and apathy contribute to a climate in which pirating is considered business as usual by local officials located at great distances from the central government.

“An Interesting Approach to Reducing the Unites States’ Trade Deficit”- is a GMAT reading comprehension passage with answers. Candidates must have a solid grip in English GMAT reading comprehension.

There are comprehension questions in the above GMAT Reading Comprehension passages. GMAT Reading Comprehension Questions are delineated to evaluate candidates’ abilities to analyze and be conceptual for the answers. Candidates can brace up and take preparation by answering GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. Which of the following, if true, would most weaken the author’s assumptions regarding the effectiveness of the new system of controlling high-tech trade to China?

(A) Several local police chiefs in remote provinces have been demoted for taking bribes to not enforce pirating laws.
(B) New practices in China have led to greater transparency of the connections between companies and government agencies.
(C) Several U.S. manufacturing firms have expressed reservations regarding the list of acceptable exports.
(D) The new policy makes clear that any business that exports items that are not on the list of acceptable exports will be subject to large fines, and that the company’s chief officers will likely face jail sentences.
(E) The list of acceptable exports makes clear which ones have military applications.

2. The attitude of the author of the passage toward trade with China is best described as one of _______.

A) skeptical advocacy
B) disinterested description
C) considered wariness
D) amused fascination
E) troubled confusion

3. According to the author, the new system of exporting high-tech goods to China _______.

A) is an imperfect improvement over the old system
B) can take too much time to be truly effective
C) will almost certainly be adversely affected by local corruption
D) aims to speed up the process of receiving approval for the exportation of some goods
E) will only apply to items that can be used for military purposes

4. One issue that affects both high-tech exports and intellectual property rights is ______________.

A) the difficulty of knowing what is truly going on in all parts of the country
B) that some products intended for commercial use can have military applications
C) the lack of interest in monitoring illegal activity of this sort on the part of provincial governments
D) the willingness of some American firms to do business with China without due consideration of the political repercussions
E) too many of China's products infringe on existing patents, trademarks, and copyrights

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