The role of the state in effectuating these policies with larger aims of supplanting U.S. As identified in the United States Trade Representative (USTR) Section 301 report, intellectual property (IP) theft and forced technology transfer and other Chinese unfair trade practices threaten high-wage jobs and high-value-added manufacturing in the U.S. China’s economic practices now risk harming the U.S. Nevertheless, the economic costs of the bilateral economic relationship are very real. and Chinese companies in each respective market, a calculus that shows the U.S. In addition, the trade deficit does not account for the activities of affiliates of U.S. domestic investment needs and the growth in U.S. domestic savings rate, which requires overseas capital to fund U.S. imports than it is a reflection of a low U.S. trade deficit is less a product of restrictions on U.S. Despite these costs, the frequent focus by the administration on the bilateral deficit is not a meaningful yardstick for assessing U.S.-China trade or its impact on employment. industries-particularly low wage manufacturing. 1 However, trade with China has also led to job destruction in some U.S. exports to China support around 1.8 million jobs in sectors such as services, agriculture, and capital goods. The U.S.-China economic relationship delivers more benefits to the U.S. In order to assess what might constitute a sustainable economic relationship going forward, it is important to be clear about the costs and benefits of U.S. The state of the bilateral economic relationship Resolving U.S.-China differences in a meaningful way will take time. has championed in the post-World War II era.Īll of these matters underscore the complexity of U.S.-China bilateral negotiations as well as the stakes at play. The resulting deal should address the real issues at hand in a free market manner and strengthen the multilateral global trading system and rule of law that the U.S. In particular, creating a managed trade relationship with China would not be a constructive outcome. also needs to stay true to its values and not accept short-term gains or “fig leaf” deals. In taking this multifaceted approach, the U.S. From this perspective, we outline a multipronged strategy, including bilateral, multilateral, and unilateral actions, as well as working with allies, that together would constitute positive next steps for this critical economic relationship. has had at the WTO, the WTO should be central to resolving U.S.-China trade tensions. concern over the national security risks China presents, particularly with respect to technology access.ĭespite the challenges the U.S. These issues also come at a time of increasing U.S. In addition, new trade rules are needed to address China’s economic practices not covered by its WTO commitments, including in areas such as state-owned enterprises (SOEs), certain subsidies, and digital trade. Progress on specific trade issues will require China to comply with its World Trade Organization (WTO) commitments and to make certain reforms that will likely touch on areas of state control over the economy. concerns that underpin these bilateral trade tensions stem from specific practices endemic to China’s economic model that systematically tilt the playing field in favor of Chinese companies domestically and globally. Nonresident Fellow - American Enterprise Institute
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