US-China Trade Relations Assignment Sample

International Political Economy

A bi-lateral trade agreement was signed between United States of America and China in 1979 and this agreement was the initiation point for economic reforms which resulted in economic growth of the country. Imports and exports stood at $4 billion when the agreement was signed and was evaluated to have grown to more than $600 billion in the year 2017. China’s participation in International trade also grew by leaps and bounds during this period, world trade rose from 0.6% in 1977 to 4.9% in 1994 for China. This signifies a rapid growth of trade transactions between the two nations, and the other nations of the world as well. China remained the principal trade companion with U.S. till 2019 and still holds the position of being the largest source of imports in the U.S. China remains a major supplier of advanced technology products to U.S. and also holds the largest number of U.S. Treasury securities. Initial trade relations between the two countries were strained as China was not a member of the World Trade Organisation and became a member of WTO in December, 2001. Trade related issues that cropped up before that period had to be solved by way of bi-lateral negotiations. China is one of the countries with the largest economy and is a major player in international capital markets.

The major items of import and export between China and US are displayed below:

When Trump took over as President of the United States, trade with China was creating an imbalance in the country as the rate of import of goods from China to the U.S. was much more than the rate of export of goods from U.S. to China. The was a trade deficit in U.S. with respect to China amount to $345.6 billion in 2019, which was 18% less that the deficit in 2018- which amounted to $418.9 billion. The exports from US to China was totalled at $106.6 billion while the value of imported items stood at $452.2 billion. The administration of the Trump government put in place various tariff measures to keep the trade imbalance in check and imposed tariffs on goods of Chinese impost worth $250 billion. This deficit is largely a reason of the cheap labour available in China due to which retailers and traders send their raw materials to China for processing and the end product, when shipped back to the US falls within the ambit of imports. This practice has led to the destruction of the internal low-wage manufacturing industry in the US and resulted in unemployment.

China is posing new security risks to the super-powers of the globe with its new subsidy policies which is inter-linked to trade politics. China is providing poor developing countries with loans for huge amounts for development at low interest rates. When these countries are not able to pay the loan amount back, China trades the control of the ports of these countries till the fulfilment of the loan payment. This has given control of a majority ports to China. Countries all over the world are highly dissatisfied with these developments although no collective action has been taken against China yet.

Reference for US-China Trade Relations

Oatley, T. (2015). International political economy. Routledge.

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