The Trade Relations between China and US
U.S. trade relations with China are currently characterized as being intricate and multifaceted. The American government considers China as a partner in several areas and a competitor in other areas. Therefore, the relations between these countries cannot be termed as one of allies or as between enemies because of the complications of their relations (Tung 25). In the 19th century, the Qing Dynasty launched the first modern executive diplomatic associations. Later, after Xinhai revolution, the diplomatic ties formed by the Qing Dynasty were retained and maintained by the newly formed Republic of China.
During the Second World War, America and China were allies, even though the US government did not instantly recognize the new government of the China. Thirty years later, in 1979, the American government recognized the Chinese government on Taiwan, and even though America maintained relations with the Taiwanese government, it did not maintain relations with the administration on the mainland. When the Sino-Soviet split occurred through the Cold War, America turned to the Chinese mainland and created ties with it, and took advantage of the relations to counter the Soviet Union and its influence (Tung 26).
Currently, the US has the largest economy worldwide, while China has the second largest economy. China’s population leads in the world while that of the US comes third after China and India. China and the US lead in greenhouse gas emissions, and these two countries are the biggest consumers of motor vehicles and oil. These two countries have had relations for a long period, mainly stable while others characterized by tension, especially the happenings at the dissolution of the Soviet Union, human rights issues of the people from China and Taiwan political status. When the Soviet Union was dissolved, a common enemy was removed and America became dominant in the world (Yao 339).
China is currently the largest foreign creditor for America and its challenges are mainly internal, thereby maintaining stable relations with America. The two countries’ relations have been termed as the most significant mutual association of the twenty first century. According to Justin Lin World Bank’s head economist, China would rank the globe’s prime economy in 2030 after it ranked second in 2010. Lin stated that the trend of China’s economy would topple that of America if the current trends in trade and economy at large for the two countries continue (Tung 28). Reports also indicate that with the current trends and China’s strategy to invest in the future, two thirds of the earth’s middle class will reside in China. Theoretical economics are very positive about the China rise in the economy and these will influence its nature of trade with the USA.
China is the prime creditor and American debt holder, and has severally raised concerns over the America policies concerning deficits and fiscal. To safeguard and maintain good relations in the trade, China has continuously appealed for the safeguarding of their investments in America and in American treaties. China has also raised issues on the dollar value, appealing to the US to maintain its purchasing value. Over the period that America and China have had trade relations, China raises concerns about the borrowing habits of the US to clean up the messes of its own making. It advised the US to get away from the addiction of borrowing and always have an “addiction to debt”. In order to achieve a fiscal balance, China advised America to use “common sense” and find a solution besides borrowing. They also advised America to learn how to live within its means and ensure safety on the China’s dollar assets, especially because China was the largest creditor to America. China is promising to take over the US economy by the year 2015 as US further loses trade war with China (Tung 36).
Progress in US – China Economic Relations
The past three decades of the increasing economic power have alleviated poverty in the lives of millions of Chinese people and thrust the country into the international market as the 2nd prevalent economy and the globe’s number one exporter. Becoming a member of the WTO in 2001 saw a six fold growth of the Chinese foreign trade. This followed an initiative known as the “Going Out” strategy, launched in 1999 to facilitate international investments (Friedberg 7).
The US has acknowledged and welcomed the tough, thriving, and flourishing China as a country that plays an imperative role in the world affairs and with a view to adhere to the international standards. The US is counting on the leadership of China towards the course of meeting the numerous challenges that are facing the global economy. About four decades ago, when the then leader, Nixon, primarily stopped over China, there was no economic relationship between the two countries (Friedberg 8). By then, neither the two countries’ economic policies mattered to any of them.
Presently the situation is incredibly different; for instance, just in 2011, the US imported three hundred and ninety-nine billion worth of supplies from China and vended one hundred and three billion dollars to China. This can be estimated to a near fourfold increment in exports and a fivefold increment in exports in the span of ten years, since the joining of the WTO (Friedberg 9). Currently, the US and China have strong ties in a relationship where they share numerous common interests and a variety of mutual benefits. Some areas on where the opinions and the values of the two countries diverge are also a matter of priority.
It is important to recognize that the factors that motivated the growth of China during the last four decades are not likely to be the same factors that will steer its growth even further. Therefore, to address these differences and forge common interests amid the US and China in the next four decades, the US must identify the areas where its interests and those of China converge (Friedberg 10).
Opportunities for Future collaboration
There still exist numerous possible areas that could maintain and nurture the prospect of the US -China collaboration in a “win-win” fashion. An example of a notable cooperation area is in the advancement of science and technology. Dating back to 1979, a bilateral agreement between Deng Xiaoping and leader Carter saw a success story of the US-China Science and Technology contract. A look into China’s 12th 5-Year Strategy, it can be concluded that the host of policies reflected would be beneficial to the US as well; for instance, the area of shared interests like China’s effort in improving the protection of intellectual property rights. China has decided to institute a State Council-level leadership structure, under the leadership of the Vice Premier Wang Qishan, to direct the IPR enforcement, an initiative that is of much interest of US companies as well as the innovators of China (Friedberg 27).
A majority of the compelling priorities in the US and China after the government transitions in the two countries is internal in nature, in terms of social equity, economic growth, employments and so on, and will need imaginative and innovative solutions (Friedberg 30). There must be mechanisms in place to ensure that US -China relations uphold the internal objectives and also to ensure that neither of the two countries is looking forward to realize them at the expense of the other.
A critical review of the 12th Five Year Plan reveals several key areas from which the two countries can simultaneously advance their economic relations by strengthening the economy of America and aiding China in the accomplishment of its own domestic agenda. Some of these include the US heartening China to preserve a plan that promotes innovation with respect to the logical possessions rights and work furtive, one that is free of discrimination, that would be beneficial to the US companies and China innovators, and one that would allow the existence of closer collaboration between China and the foreign companies (Friedberg 31).
Another area would be alliance on the surroundings, clean water, and climate variation through mechanisms that cultivate exchange of scientists and plan makers. This would be advantageous to the universal environment by helping to combat environmental degradation in china and also aiding help in addressing the challenges of public instability and ailing, which have been as a consequence of its heavy reliance on coal (Friedberg 32). Working together with the US, China will be in a position to increase its investments in the US, a factor that would enhance the balance of the two economies, leading to the creation of domestic employment and growth in both countries. Improving the linkages between the two countries’ petite- and medium-sized projects will lead to the further creation of employment as well as the promotion of a better working environment for private firms (Yao 340).
Raising agricultural trade would promote the level of US sales to China, which would aid China in meeting its food security requirements. Cooperation in the sector of product safety would be essential in the promotion of health of the civilians in both countries, as in the already successful FDA programs. Cooperation in the financial sector reforms will open more opportunities for the US financial companies to establish their processes in the Chinese bazaar (Friedberg 40). This will also boost the economic development in China by ensuring a more effective means of managing capital.
Most importantly, based on the above areas of collaboration, the US and China government systems share a mutual interest in bringing together their governors, local and public heads to cooperate on issues concerning the economy, energy and the environment. These will provide a benchmark for a sequence of joint benefits, which include a boost of the US exports to China, provision of the Chinese consumers with access to the US services and education, promotion of scientific exchanges and encouragement of Chinese investment in the US (Friedberg 41).
Challenges for the US – China Economic Relationship
There are some specific areas of difference that will necessitate to be addressed by the two countries in the prospective years. The points presented here are a reflection of the US viewpoint on the difficulties faced by China as it fashions itself as fiscal supremacy and looks forward to becoming more integrated in the global economy.
First, given that China wishes to have its corporations acknowledged internationally as an investment solely for commercial purposes, it will experience difficulties in trying to convince those firms operating in sectors which are sheltered from overseas rivalry or twined off alongside overseas investments. This is because a critical look at the “China 2030” report by the State Council’s Development Research Center and World Bank reveals that the Chinese growth model heavily depends on the industrial policies, which are argued to be giving unfair advantage to the domestic firms, specifically the SOEs (Friedberg 42). The unfair and preferential policies are in terms of subsidies, access to financing as well as discounts in land and energy. It is common knowledge that a step to put an end to these practices will require political courage of the Chinese government because it will be touching on some deeply entrenched vested interests in the entire country.
The US will persist to press China to promote a worldwide fiscal atmosphere that will be synonymous with consistency in competitive neutrality that will enable all firms, despite their forms of ownership, able to compete on a level ground. Some evolutions have been made in the effort to tackle these apprehensions on iniquitous practices through the continual bilateral relationship. Through the May 2012 Strategic & Economic Dialogue, the Chinese government agreed to reconsider reforms in an effort to reduce the present privileges that are being enjoyed by the SOEs and advance towards a supplementary bendy exchange rate structure with the market playing a bigger role (Friedberg 43).
Secondly, China will experience difficulties in actualizing its dream of becoming a world leader in this information age, due to the fact that it restricts access to information. The US is concerned with the extensive censorship and restriction of information access, which includes surveillance on the Internet. The restrictive “Great Firewall” installed by China is costly to both the Chinese and the foreign firms in the attempt to get around. It is of great concern that these restrictions are causing serious human rights violations as well because it acts against the right to independence of expression, assemblage, and alliance. The censorship and restrictions impede the liberated stream of information and the freedom of expression as well as the innovations that come with them (Friedberg 44). The Chinese government should realize that safeguarding an information setting that is blocked or splintered accrues cumulative and high costs as it will hamper originality, study, ingenuity, entrepreneurship, ventures, schooling, and development. The Chinese government should allow a free flow of information in order to open channels for exchange of dreams, on which originality and novelty are built upon.
A Chinese nation that protects the Intellectual Property Rights (IPR) of its people and foreigners is the key if China wishes to be a leading force in innovation for the forthcoming years and move away from industries that are only competitive with low wages. The issue of IPR is of critical importance to the innovators and inventors as it will translate into major benefits in jobs and profitability of the innovative sectors. The US maintains that this is a vital matter plus is ready to work closely with the Chinese government with the aim of strengthening its legal environment to tackle this issue. Many of these concerns are addressed through the US – China Innovation Dialogue, in which there has been a revelation that many Chinese firms have a sturdy curiosity in the triumph of IPR protection because they are developing innovative products and wish that their IPR were protected (Friedberg 44).
China is known to depend on the open trading system, which predisposes it to problems of resistance to open trade given that its own policies do not match the basic tenets of the system. The engagement of China with the WTO and other polygonal foundations is vitally handy and has been beneficial not only to China but also to the whole world. However, China insists that other countries should abide by the WTO rules, which are also largely based on Beijing’s interests – a factor that is contradictory to the organization’s founding tenets of fairness and nondiscrimination. China will only maintain and improve relations with the other countries and boost trade opportunities for its firms if it shuns applications that may not be rigorously illegal under the WTO (Friedberg 45).
As the Chinese government is continuing to seek and ensure a steady and consistent supply of energy as well as raw materials, it may encounter difficulties unless its firms abroad begin to perform in a way that is consistent with the global standards in terms of ecological concerns, respect to labor practices, and other fundamentals of good corporate governance. The involvement of China and the US in the developing world through investments or development activities should lead to the promotion of international norms in accordance with the rule of law and transparency (Friedberg 45). Good practices are synonymous with government engagement with the local communities and the civil society, recognition of the larger collective and ecological conscientiousness, and the creation of economic opportunities as well as upward mobility for the local employees through training and ongoing workforce improvements (Yao 341).
The Future of US – China Relations
Despite the challenges that face the relationship involving these two countries, the prospects of the US -China economic relationship is bright. Much about the prospects of many world economies in the 21st Century lie in the relation linking the US and China, and how these two countries will be able to sustain growth and development in their own economies and be in a position to jointly address the future challenges that will be facing the global economy (Friedberg 45). Only through this, will both the countries be able to better their economies.
Results of the US-China trade
The outcome of the trade between these two countries has been an advantage in the two countries by earning both countries huge benefits. In 2009, China was ranked third largest market for all the American exports, which also gave huge returns to the USA. Companies from the US cumulatively invested over sixty two billion dollars in Chinese fifty eight thousand projects, and this trade benefited the two countries immensely. In 2008 alone, America was able to generate over eight billion profits in China (Shui 4063). China has traded with the USA and helped it overcome crisis such as those that erupted since the international financial crisis. When America exports to other nations dropped to below 17.9 percent, the exports to China did not reduce but increased especially in 2009. America has found it beneficial to have China as a market for many of its manufactured goods because it shelters the US from many effects of financial crisis.
Trading with China has changed and stabilized the living standards of US residents, because the cost of living has been brought down by importing China good-for-value materials. Materials from China, which are labor-intensive products, have contributed to a lower cost of living in America. The trade relations between these countries also include investments, services, and goods and the bilateral interests are roughly balanced. US surplus in the service trade with China increased and grew to an extraordinary 34.5 percent annually, between the years 2004 and 2008 (Shui 4063). This was dwarfing the surplus good growth of China to America.
The US-China operation discrepancy cannot be blamed on the Renminbi exchange rate and therefore the Renminbi exchange is not the solution to addressing these trade imbalances between these two countries. Reason being, even though the Renminbi exchange rate increased by twenty one percent against the US dollar, increasing the China trade surplus to 20.8%, these surpluses have fallen by 16.1% regardless of the exchange rate remaining constant since 2009. To support this, is the loss of dollar value against the Euro and Japanese Yen example, which did not affect the trade between the countries in question. On the contrary, to this argument, a stable Renminbi and dollar are significant and safe to the overall interest of all communities internationally (Shui 4064).
China seeks and encourages balanced trades with other countries, especially the US, and for this reason, America should really expand their exports to China. Apart from encouraging balanced trade, China is not prone to financial crisis, thereby fits to be the best country to shelter US from financial crisis. Having a stable and balanced trade between China and America can provide a win-win relationship, in addition to other mutual benefits and sustained development. To achieve this, America needs not to restrict China’s export, but to increase America’s exports innermost goods and services to China (Shui 4064). China hopes that, the US will overlook the Cold War conflicts and effect, move on, and work on implementing its approach to boost exports, relax its control over exports from China, and expand the export of competitive goods to China.
Overlooking politicizing the US-China trade is the only sure way that these two countries can accomplish a very successful trade benefit. Trade protection by the US should be stopped and full trade play platform encouraged toward the two counties, to maximize their mutual benefits. China hopes that, America will soon recognize the status of China market-economy and decide to revise the export control to help achieve massive mutual benefits for the two countries. In addition, America should expand its convergence in its interests in cooperation’s related to trade and economic concerns. The two economies of China and US are highly harmonizing towards each other with big potentials (Shui 4065). Currently, both countries are restructuring their industries, which will increase their growth and returns from their trade relations. This will also increase the advantages in technology, capital, and trade markets and help the countries explore cooperation’s low-carbon economy, high tech manufactured goods, and service trade.
Business deals facilitation in China and America should be one of the fundamental state rules to uphold trade. This can improve clarity in trade policies, promote trade affairs, and encourage investments. The US imposes irrational restrictions on the Chinese companies investing in America, which restricts trade outcomes because of the poor trade policies and hinders multilateral trading system (Yao 341).
US Exports to China
The exports of US to China in 2013 amounted to one hundred and twenty two dollars, which was an increase of 10.3% from the previous years’ exports. In 2013, China ranked third largest America merchandise export, following Canada and Mexico. From 2000 to 2013, US exports to China grew from two point one percent to seven point seven percent. The leading merchandise ports to China in 2013 were, navigational, gauging, electro-medical, and control instruments, grains; aircraft and parts; waste and scrap; oilseeds, and motor vehicles (Morrison 7). From 2004 to 2013, America exports to China also increased substantially by three hundred and forty nine percent, and this marked Americas fastest export growth rate among its top ten export markets around the world.
Trade between America and China continues to increase in amounts of exports to China such as agricultural products, which ranked China the second largest in Agricultural exports from the US. In addition, China is also an important market for the US private service exports, which amounted to thirty billion in 2012, making China the fourth-largest market for US private service exports (Morrison 7).
Major US exports to China
($ Million and percentage)
| NAIC Community | 2009 | 2010 | 2011 | 2012 | 2013 | 2012-2013 % Change |
| Total Exports to China | 69,576 | 91,878 | 103,879 | 110,590 | 122,016 | 10.3% |
| Oilseeds and grains | 9,376 | 11,208 | 11,500 | 16,546 | 16,092 | -2.7% |
| Aerospace products and parts | 5,344 | 5,766 | 6,392 | 8,367 | 12,620 | 50.8% |
| Waste and scrap | 7,142 | 8,561 | 11,540 | 9,526 | 8,765 | -8.0% |
| Motor vehicles | 1,134 | 3,515 | 5,369 | 5,788 | 8,614 | 48.8% |
| Navigational, measuring, electro- medical, and controlling instruments | 2,917 | 3,782 | 4,275 | 5,153 | 5,732 | 11.2% |
| Semiconductors and other electronic components | 6,041 | 7,555 | 5,668 | 4,859 | 5,724 | 17.8% |
| Basic Chemicals | 3,433 | 4,202 | 4,658 | 4,716 | 4,934 | 4.6% |
| Resin, synthetic rubber, & artificial & synthetic fibers & filament | 4,036 | 4,336 | 4,476 | 4,278 | 4,237 | -1.0% |
| Other general purpose machinery | 1,890 | 2,445 | 3,113 | 3,021 | 3,166 | 4.8% |
| Meat products and meat packaging
Products |
1,438 | 1,319 | 2,020 | 2,409 | 2,759 | 14.5% |
Source: U.S. China-US trade issues (2011)
China’s strategies to improve rural living standards, investing in modern infrastructure, improving its industries could develop a substantial demand for foreign imports, and thus being a promising market for the US even in future. Currently, China has proved to be among the earth’s highly mounting wealth and this is projected to continue for a long period into the future. China’s large population, enormous foreign exchange reserve (of over $3.7 trillion in September 2013), and its huge economic growth make it a potentially massive market. Its large number of “middle class and affluent” consumers in the population makes it a potential market for imports from abroad (Morrison 7).
China-US Trade concerns
Over 30 years, the trade between China and America has expounded their economic ties substantially. The economic growth achieved from these two countries trade relations mark an achievement of trade rise from $2 billion to $562 billion for the year 1979 to 2013. Chinas economic reforms began in 1979, it was the same year the US, and China reestablished diplomatic relations. After signing the mutual trade contract, in 1979, they established a joint most-favored-nation conduct in 1980. Since then, their trade relations have boosted their economic growth and have provided the two with immense returns to contribute to the development. By then, the total exports and imports between the two countries amounted to $2 billion, while China ranked twenty-third largest US export market and forty-fifth largest US sources of imports. By 2013, China ranked America’s 3rd largest market for their exports, the 2nd largest trade associate, and America’s biggest supply of imports (Morrison 19). It is anticipated to be a three hundred billion market for the American firms invested in China and the exports made by US to China.
Many firms from the US consider it very essential to participate in Chinese markets, in order to remain competitive internationally. For instance, the General Motors firm that has profoundly invested in China, and sold more motor vehicle there, from 2010 to 2013 than it did in the US market. It is beneficial for the US to trade with China because it considers China a producer of low-cost goods, which are then traded to the US consumers. These low-cost goods benefit the American consumers and the American companies that use China as the ultimate end of gathering their products. These US firms are also able to lower the cost of the final products after using the final Chinese made inputs. China is the biggest foreign holder of the America Treasury security, which amounts to over $1.3 trillion as of November 2013 (Morrison 20). China purchase of the American government debt has helped the US interest rates to remain low.
Despite the beneficial commercial ties that have continually increased the China-Trade growth, the bilateral economic ties have continued to be complex and usually raise tension between the two countries. According to the US, mostly the economic tension between America and China stem from China’s partial transition to a free market economy. China has considerably liberalized its trade regimes as well as economic systems, but recently, over the past here decades, it had significantly maintained several trade-directed policies, which have influenced trade and investment flows (Morrison 21).
American policy makers and stakeholder have expressed their concerns over the China poor record of Intellectual Property Rights enforcement and the supposed cyber spying of the US firms by the Chinese government. They are also concerned about the Chinese mixed evidence on executing its World Trade Organization responsibilities. In addition, the US has issues with the Chinese way of extensive use of industrial policies in attempts to promote the development of industries supported by the government and protect them from foreign competition.
The Chinese has a policy to preserve an undervalued currency, which in the US is a major concern, especially because of their trade ties with China. According to US economists, such policies from China harm the economic interests of America and have considerably contributed to losses in America. For instance, studies have shown that the infringement of China leadership on IPR cost the US economy over two hundred and forty billion dollars every year (Morrison 22). As Chinese fiscal expansion and living standards substantially rise, the trade benefits between China and US are expected to develop even further. Currently, China is worth $300 billion market for the America firm, inclusive of the US exports and sales from the invested firms in China.
Policymakers are concerned about the current size of America’s trade deficit with China. The US-China deficit was at ten billion dollars in 1990 and rose to two hundred and sixty six billion dollars in 2008. In 2009, the trade deficit of the US fell to two hundred and twenty seven, which is largely contributed by the effects of the global economic downturn. In the next three years, the trade deficit rose substantially to amount three hundred and eighteen billion dollars in 2013. Recently, the trade deficit between the US and China has been higher than it is with other trading partners and groups. This is evidence that the trade deficit is harming the US economy and making the trading relationship unbalanced(Morrison 23).
To solve the trade disputes with China, the US views to effectively address their contentions include taking a more aggressive stand on China such as threatening to impose trade sanctions in china unless the Chinese government addresses their trade policies, such as the IPR theft, because such policies hurt the American economy. To effectively address the effects of WTO policies by China, the US intends to increase the number of dispute settlement cases that are forwarded against the Chinese government (Morrison 23).
The US intends to resolve commercial disputes with China by using high-level bilateral dialogues such as the US -China Strategic & Economic Dialogue (S&ED), to resolve issues such as their long-term challenges in the trade affairs. By using these high-level dialogues, the US hopes to intensify their negotiations and reach an agreement point to have a fair trade relationship with China. These dialogues would also help America to complete their ongoing negotiations with China over reaching a high standard bilateral investment treaty (BIT). Consequently, the US seeks to finalize their negotiations in the WTO towards the attaining accession of China on the Government Procurement Agreement (GPA) (Morrison 25).
The US hopes to persuade the Chinese government to adhere to the Trans-Pacific Partnership parley or in addition request China to accept a joint Free Trade Agreement with the US (Morrison 26). In addition, the US intends to continue pressing China to employ comprehensive economic reforms such as abolishing the state’s function in the wealth and instead applying policies to boost domestic consumption.
Table 1. U. S. -China trade 1980-2013
($ billions)
| Year | U.S Exports | U.S Imports | U.S Trade Balance |
| 1980 | 3.8 | 1.1 | 2.7 |
| 1985 | 3.9 | 3.9 | 0.0 |
| 1990 | 4.8 | 15.2 | -10.4 |
| 1995 | 11.7 | 45.6 | -33.8 |
| 2000 | 16.3 | 110.1 | -83.8 |
| 2005 | 41.8 | 243.5 | -201.6 |
| 2006 | 55.2 | 287.8 | -232.5 |
| 2007 | 65.2 | 321.5 | -256.3 |
| 2008 | 71.5 | 337.8 | -266.3 |
| 2009 | 69.6 | 296.4 | -226.8 |
| 2010 | 91.9 | 364.9 | -283.1 |
| 2011 | 103.9 | 393.9 | -295.5 |
| 2012 | 110.6 | 425.6 | -315.0 |
| 2013 | 122.0 | 44.4 | -318.4 |
Source: China-US trade issues (2011)
US trade deficit with China widens
In 2013, the US exports to other twenty-seven nations from European nations fell tremendously to 7.9 percent. This was unlike the situation in the year before where the export percentage was higher. The US continues to suffer a decline in the export percentage to all other countries, especially to the United Kingdom and China. Exports to United Kingdom fell from May 2009 and by 2013, exports to China had gone down to 4.7 percent (Yao 345). China has been doing well in the trade sector with the USA and its imports continuously surge as they put up long term developments. Imports from China heaved to 12.2 percent and this continued to lift the contentious America trade shortfall with china. The trade deficit by 2013 had reached to $ 24.1 billion, which is a big rise from $17.9 billion earlier 2013.
The trade between China and US had greatly been defined by the economic decisions made by the two countries. Initially, the US had a very strong economy compared to China but recent cases show that China will topple the US and becoming the leading country with a very strong development strategy to sustain the status. The biggest advantage to China is its strategy to build for the future and invest in long-term income generators.
By China investing greatly in its future, more jobs are created for the people and this enables it to maintain a steady workforce. China invests too much of its revenue constructing infrastructure to interconnect every part of the country and improve the process of achieving a stable and a larger economy. Education and technology receive huge funding from the revenue of the country because education provides a learned workforce, which will be effective in contributing innovations and using technology for more economic growth. These initiatives are long-term generators of revenue to the country, which raises its GDP (Yao 346). On the other hand, the economy of America continues to decline for reasons such as not worrying because they can print their own money, while the Chinese use their surplus money to invest in real wealth such as buying gold and purchasing American assets. China is increasing its wealth by buying some of the most important assets of the US such as ports and real estates. Because of Americans, trade deficit with China, the country keep sliding into a no growth economy of just one percent GDP growth in a generation.
A study has shown that the Chinese economy has continued to rise magically since 1987 and the future projections show that by the year 2040, it will have grown to reach $123 trillion. This will be almost triple of the entire world’s economy’s output of the year 2000. This will mean that China’s per-capita income will increase as well to hit $85,000. This will be more than a double economic growth in the forecast for the European Union. It will also be immensely higher than that of Japan and India, especially because China has moved from being a poor country in the year 2000 to an extremely rich country by 2040 (Yao 346). All these changes and concerns will have a great impact on the imports and exports between China and America, affecting the country’s trade in a detail.
America’s per-capita prosperity is higher than that of China, but in thirty years’ time, China’s GDP of forty percent will dwarf that of America (fourteen percent) and that of the European Union (five percent). China has traded with America for a long period, creating a fast growing market for goods from America, but in the first four months of 2013, the exports declined to 4.7% (Yao 351).
Works cited
Friedberg, Aaron L. “The Future of US-China Relations: Is Conflict Inevitable?.”International security 30.2 (2005): 7-45.
Morrison, Wayne M. “China-US trade issues.” (2011).Congress Research Service1-36.
Shui, Bin, and Robert C. Harriss. “The role of CO2 embodiment in US–China trade.” Energy Policy 34.18 (2006): 4063-4068.
Tung, Rosalie L. “US-China trade negotiations: practices, procedures and outcomes.” Journal of International Business Studies (1982): 25-37.
Yao, Shujie. “On economic growth, FDI and exports in China.” Applied Economics 38.3 (2006): 339-351.