US-China Relationship in the Global Economy
Currently, China and the US are the biggest economies in the world. The economic relationships between them are essential to the growth of the global economy in the future. However, the relationships between these two nations have been in constant conflict. Special interests group controls the US trade policy toward Chinese market. The bilateral surplus of China generates political concerns in the US. The Chinese imports have eliminated imports from developing nations with little impacts on local production. The effects of fast development of bilateral relations between two nations are positive on the economy of US.
China and the US are the leading economies across the globe currently and the type of their relationship has significantly effect for the effective functioning of the financial systems and the international trade. The two nations are turning out to be more integrated in terms of their people financial capital, and goods (Kissinger 45). Moreover, relationships between these economies are essential to the growth of the international economy in the future. However, economic relationship between them has faced a number of challenges. China is the most populous nations in the world and has recorded high rate of growth in the past decade. In addition, it is trying to implement and design major economic reforms (Lieberthal and Jisi 4). Trade conflicts emerge between the country and the US leading to unfriendly bilateral negotiations.
Sino-American Economic Relations
The high rate of China’s integration into the world economy has prompted certain challenges for affluent nations such as the US. China has a swiftly rising total bilateral trade excess with the United States (Kissinger 45). The dissimilarities in political structure, the expanding bilateral imbalance and the imports concentration in small manufacturers all determine the political debate in the US.
In 1994 at the single digit standard international trade classification (SITC) level, the United States exports to China was highest due to transportation and machinery at $5.1 billion, chemicals at $1.5 billion, while mining occupied $1.2 billion. The three figure SITC group featured exports such as telecommunication materials ($563 million), cotton textile fibers ($648 million), fertilizers ($944 million), aircraft (1.9 billion) (Lieberthal and Jisi 5). On the other hand, the Chinese imports prominently featured light manufactures, apparel and footwear which was worthy $24.2 billion, while pottery, wood products, and textile materials was at $3.3 billion, and transportation equipment $9.0 billion (Peng 97). Furthermore, apparel reached $1.7 billion and girls and women coats $2.0 billion, footwear $5.3 billion, and sporting, games, and toys goods were $5.5 billion. Such belong to the SITC third category. Moreover, such imports are completely labor-demanding manufactures. According to economic theory, labor-demanding goods produces descending pressure on the salaries of import conflicting local low-skilled labor in cases where manufacturing in these activities is conducted domestically (Lampton 51).
Figure 1 Imports and Exports Dependence (Lieberthal and Jisi 4)
Furthermore, in 1994, the industrial sectors in the US were highly reliant on China. The exports to China included the agricultural pesticides, which accounted for 40 percent of total exportation to China. Others exports from the US to China includ