The U.S. - China Trade War : Is it More Pain than Gain?

Abstract

Over the last 40 years, the U.S.-China relationship has experienced many twists and turns. When China first embarked on a series of economic reforms, the U.S. and many of its western allies hoped that these more open-door policies would herald not only a new level of prosperity for the Chinese people but also usher in more western philosophies and standards of government. However, while the economy has undoubtedly prospered, China's ties with the U.S. have continued to remain strained. The current Trump Administration has gone to increasingly greater lengths to address what it perceives are significant imbalances in the relationship. A new trade has been sought, however the use tit-for-tat policies which has seen the introduction of new tariff measures by both sides has undoubtedly hindered this negotiation process. Our research examines complex nature of the U.S.-China Trading relationship. It provides a detailed appraisal of the current state of U.S.-China trade as well as detailed overview of the trade battle that has unfolded in recent times. As part of this, the study also explains the key aspects behind the conflict, including: apparent unfair trade practices, such as currency manipulation; the economic rise of China; and the ideological differences that exist between the two countries. The study also addresses Chinese concerns that the U.S. fears what a growing China may mean for its global interests by pointing to the 60% rule. An assessment of the empirical literature shows that the economic impact of the U.S.-China trade war has been felt by both sides. However, China has been found to suffer more, with research showing GDP falling from -0.1% to -1.35% in the U.S. and between -0.3% and -1.5% in China.