U.s. China Bilateral Trade And Policy Implications

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A RATIONALE FOR U.S. - CHINA BILATERAL TRADE AND POLICY IMPLICATIONS ABSTRACT China incurs a bilateral trade surplus with the world’s three main trade centers — the United States, the European Union, and Japan whereas the U.S. beholds its most hefty trade deficit with China. To come into trade agreement with China is considered to be part of USA’s overall strategy of benefiting from China’s economic interchanges that would help the U.S. economy to achieve national security (China’s Trade with the United States and the World, updated January 4, 2007). This essay extends a quantitative framework of trade patterns between U.S.- China mainly after China’s accession into WTO in 2001 Through statistical data, we analyze the various sectors…show more content…
Currently, China is the second-largest trading partner, third-largest export market and the biggest source of imports for the United States. The U.S. government’s debt purchased by China provides US the benefits of low interest rates (Morrison, 2015). While for few this economic relationship is considered to have a positive effect as it helps to fund the U.S. economy, for others it is an attributable concern that China may gain more power over the U.S (Loc.gov, 2016). Some major trade policies have negatively impacted the trade patterns of the two countries in a way that in spite of their growing ties, the bilateral trade relationship is often laden with complexities. According to U.S., China’s unfinished ‘transition to a free market economy’ is the root cause for many trade tensions. While China has liberalized its trade governance over the last thirty years, it continues to maintain a couple of state-supervised policies that apparently distort investment flows (Morrison, 2015). The primary purpose of this paper is to reflect the trade patterns of the two countries- USA and China and illustrate various trade policies practiced by them. It is important to study the impact of policies so that the main areas of issues in the economy can be understood and the imbalances in trade can be thoroughly checked by the government by following protectionist measures. The various parts of this essay are organized as follows: In section 2, we discuss the historical

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