China-United States Trade in the Long Term. Implications for the World Economy

Abstract

The aim of this chapter is to present the historical paths and determinants of the development of China (P.R.C.)-United States (U.S.) trade against the background of their bilateral relations. The essay discusses the origins and consequences of China’s opening up and then moves forward to consider the evolution of its trade relations with the U.S.. This encompasses China’s accession to the WTO, implications of the 2007/8+ global financial crisis for these relations, as well as the global impact of the COVID-19 pandemic. This discussion is accompanied by an analysis of the political environment that led to the opening of China’s economic relations with the U.S. in 1978, including earlier political contacts and negotiations. Evolution of the China-U.S. trade balance, the growing P.R.C. export surplus as well as P.R.C. and U.S. trade policies are then considered as the source of increasing global current account imbalances and, consequently, the trade war between these two countries. The 2019–2021 sub-period has also been scrutinised to highlight the global economic effects of COVID-19 and its impact on international trade as well as P.R.C.-U.S. bilateral economic relations. The discussion in this essay is presented within a framework of the four following interrelated issues: the process of the opening up of the Chinese economy and the role of America, sources of international payment disequilibrium, the China-U.S. trade war, and the impact of COVID-19 on international and U.S.-China trade. It concludes with the key role of multilateral cooperation as a crucial factor to fight growing protectionism in international trade.