Correlation analysis of U.S. private consumption and the Sino-US trade surplus

In this paper, we study the cointegration relationship between the U.S. private consumption and Sino-US trade surplus based on the national income accounting identity and the supply and demand relations theory using data from December 2001 to December 2012 by the Johansen cointegration test and Granger causality test in empirical study. American families are accustomed to the lifestyle of excessive consumption, making the low-cost Chinese goods in high market demand in the United States. However, the long-term Sino-US bilateral trade imbalance will do harm to the economic development in both two countries. So study on relationship between U.S. private consumption and the Sino-US trade surplus is essential and helpful for trade decision making. It comes out that these two time series have cointegration relationship, besides the former Granger causes the latter significantly. Finally, this paper gives the revelations based on theoretical and empirical results.