Report: Contemporary Issues in China-US Relations and Trade

This report provides a comprehensive analysis of the relationship between China and the United States, focusing on the economic and political dynamics of the two nations. It begins with an introduction to the bilateral relationship, highlighting the rise of China as a potential superpower and the resulting conflicts with the United States. The report delves into the trade war, examining the imposition of tariffs, the impact on both economies, and the role of the World Trade Organization (WTO). It further explores the strengths and weaknesses of each country in terms of technology, innovation, workforce, and government structure. The report discusses the impact of trade wars on various sectors, including manufacturing, electronics, and agriculture, as well as the global implications. It concludes with a summary of the key issues and challenges in the relationship between the United States and China.

Relationship: China and United States
Student Details

Relationship: China and the United States 1
Contents
Introduction......................................................................................................................................1
The United States and China...........................................................................................................2
Trade war.....................................................................................................................................3
Impact of the trade war................................................................................................................4
Strength and Weakness....................................................................................................................5
Technology and innovation.........................................................................................................5
Workforce....................................................................................................................................6
Government structure..................................................................................................................7
Conclusion.......................................................................................................................................8
Bibliography....................................................................................................................................9

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Introduction
From the starting of the twenty-first century bilateral relationship between the worlds' two
countries, US (superpower) and China (rising power) is a controversial subject. From the
beginning of the century china stepping towards the world's next superpower after the US or
trying to grab the apex position of America in the world. In order to same, china putting all
afford in economic growth, and regional and global expedition of the country which is the
greatest threat for the American economy. Apart from economic growth and global expedition,
china also rising its powers in the defences sector, according to a study total expenditure on the
defence of the china will reach equal to America by 2035 (The Economist, 2013). The desires of
the one country are to maintain a superior position in the world and another country is to reach
the level of superiority or to be a superpower in the world are leading arising conflicts between
both the countries and these conflicts indicting for the cold war between both the countries.
This study covers conflicting issues of the countries, policy formation and role of President
Trump and President Xi in this relationship with discussion the strength and weaknesses of both
the countries to keep association with each other.
The United States and China
The relationship between both countries the United States and China is a consequential subject in
this century. The major conflicts that arise between both countries are the economic conflicts or
trade issues that collectively known as trade war, which is affecting to two largest economies of
the world.

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It is well known that China was a poor economical country and in the rapid growth of the
country, the US gave a significant contribution. Both countries share a harmonious relationship
from history. But the graph of the relationship between both countries is on the decline phase
since 2008 when the whole world faced a financial crisis (Chen, 2018). In 2018 the president of
China Xi Jinping has declared its objectives and mission of the country as defence development
to challenges the US and create Supremacy in Asian Countries, and to achieve this objective
china stared militarization and huge investment in advance weapons such as hypersonic missiles
(Martins, 2017). Second, create a positive and progressive environment within the country and
third, the country rejected liberalization policies, and commitment for intellectual property theft
with putting market restrictions for foreign trade (Scott, 2019).
In another side, to boost and promote American economy and manufacturing Donald Trump
advocates for the trade tariff deficit and from 2018, Donald Trump, the President of United
States started to create trade barriers and set tariffs on the china to change "unfair trade policies"
in terms of Americans (CFR, 2019). Although the trade tariffs deficit is a subject of debate in
the world, some economists believe that such trade deficit practices are tricky for the country's
economic whereas some economist supports these practices and seen as growth driving forces
for the American economy. And somewhat this trade deficit was necessary and inevitable for the
US because the country was consuming 30% world's production and the participation in global
production was only 13% till 2008 (Lin, 2018).
Trade war
To export maximization and reduction of import both countries, China and US imposed tariffs
into two rounds, first the courtiers imposed tariffs worth of US$ 34 billion on each other’s
products in July 2018, in the second US impose tariffs of 10 percent on the Chinese good which

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is worth US $ 200 billion (Brennan, 2018). In the response of the last tariffs policy of the US,
china impost levy of 5% on crude oil imported from the US. In this continuation, the US stared
collected $125bn from the import of electronics and footwear of china as 15% more taxation in
this continuation on 5,078 products china will impose 5% and 10 % levy till December 15, 2019
(Farrer, 2019). On the other side, Apart from tariff deficit United States administration restricted
the import of certain Chinese goods and products in the country and restricted to the export of
certain goods to china. Such contradictory policies and practices adopted by both countries push
them into a trade war that is affecting the entire global economy. Although, in the G-20 summit,
leaders of both the countries, had decided to resolve these conflicts by March 2019 but more
conflicts have been raised by the time (AL JAZEERA , 2019). The WTO also played a
significant role to settle down this trade war between the countries. Role of the WTO was
identifying the rules braking of china and Unites States and justification to the necessity of
bilateral actions.
Impact of the trade war
The outcomes of a trade war between two power china and the United States may be more
dangerous as expected. This trade war has created an environment of the cold war in both
countries. Before these policy formation or trade war, both the countries have benefits to each
other. According to a research export from the United States to China, it was supporting more
1.8 million jobs in the capital, agriculture, and service sector. So this trade war in the countries
results in job distractions in industries of the United States (Meltzer & Shena, 2019).
In China, the trade wars also affect adversely, this trade war in the china directly hit to the
economy and growth of the country and sales declination, especially in manufacturing and
electronics industry. Presidents of both the countries Xi Jinping and Donald tramp have accepted

Relationship: China and the United States 5
the adverse economic impacts and decide to end the war in a meeting in Argentina in the year
2018, but there were only false promises. Figures also show that in the year 2018-2019, the
financial growth of both the countries was on decline rate by 10%. The trade wars affected both
the countries in almost every sector including manufacturing, electronics, agriculture, real estate
and service sectors of both countries (Lee, 2018).
According to an analysis it has been found that in the United States, customers are bearing brunt
of this tariffs policy of the US on China, American manufactured products are costly than
china's imported products, thus consumers are paying more for the same product earlier they
ware paying less. The analysis shows this trade war results as 25% export losses costing around
35 billons US$ to China. Despite, tariffs substantial China is still maintaining 75 % export to
United Nations. Notably, the impacts of the cold war are not on the main contenders, but the
whole world is facing this bitter impacts. The trade war compromises to global stability and
economy (UNCTAD, 2019).
Strength and Weakness
In 2011, US President Barack Obama said that the rapid growth of China in terms of economic
growth, and huge investment for science, technology, and innovation set challenges to the
leading economy of the country. So it is important for the US to improvement in innovation and
competitiveness, and these proactive concerns of the country led to new strategies and policy
development. But there are some points to take into consideration by the policymakers of both
countries.

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Technology and innovation
Advance technology is the greatest advantage of China and technology advancement of the
country played a tremendous role in the economic growth of China. The Chinese Model "import/
assimilate/re-innovate" proved a successful strategy of the country, this strategy attracts the
manufacturing of foreign companies including manufacturing companies from the US. But with
the same end, China has a significant lack of original innovation. In the year 2008, when the
whole world was facing financial stress, China spent around $66 billion on research and
development, which was a huge investment by any developing economy (Financial Times,
2019). It is unfortunate for China that despite this great investment country could not foster
original innovative environment in the country, because most of the Chinese higher education
universities and R&D institutions have been identified under the high rate of misconduct and
academic dishonesty, On the other hand, United States known for its strong innovative
institutional environment (UNCTAD, 2019). The higher education universities and R&D
institutions of the US have nexuses for innovation which have highly scientific integrity. This
high integration towards the innovation of the US helps to maintain technology leadership with
continuous improvements in R&D and fostering an advance climate of the original innovations
(Nye, 2019). Thus it is clear that both the economics have their strengths and weakness and
interdependence in the field of technology and innovations.
Workforce
Cheap Labour rate in China is a key point for Chinese economic growth. China is a country with
the highest and well-educated population, which helps to develop the availability of an abundant
workforce on low wages. That results in lower variable costs for manufacturers for production
facilities in China (Li et al., 2012). On the other side, the US has an absence of a productive

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youth population which leads to labor supply issues in the country and forced to manufacturing
companies to move in China for the labour supply or US manufacturing companies hire from
china and other Asian countries. But Donald Trump's new immigration policies are directly
affecting to the labour market of the country as well as tariff policies of China are affecting
manufacturing unites of the US into China (Rizzo, 2019).
Government structure
China has a Strong directives central government structure that is helpful for the technological
achievements of the country. In the technology environment China has the largest hydroelectric
dam and fastest supercomputer in the world. Besides, the country has high-speed rail networks,
promptly expanding Internet access and a high rate in the production of solar power. This
technology advancement is only possible due to interventions of Strong directives central
government but on the other side of the scenario, this Strong directives government structure
leads dissatisfaction in people of the country (McGregor, 2019). That decreases morality,
creativity, and self-motivation of people and develops a robotic generation to follows the
instructions of the central government, which reduces the sense of belongingness that ultimately
results in low productivity. whereas the United States is a democratic country with a free press
and federal government system which allow to people to access the government investments
which may consider a great strength of the country but it reduce the risk-taking capacity of the
country to be highly competitive economy in the world (Chatfield, 2016).
Apart from these weaknesses and strengths that keep both the countries associated with each
other, there is a list of products and services that makes both the countries interdependent despite
the trade war of tariff policies of both countries.

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Unites States depends on the Chinese import of electrical machinery, equipment, crude oils,
metals such as ores, copper, slag and ash, optical, technical, medical apparatus, vehicles, plastic
products organic chemicals and gems, precious metals and agriculture products (Pines, 2019). In
return, import of these in the United States from China help to China to collect US $ which is the
keystone of the growth of the Chinese economy.
Conclusion
This discussion covers well-known global issues of recent years or cold war between
Washington and Beijing under the leadership of Donald Trump and Xi Jinping respectively. This
discussion gives an outline that how ambitions of the superiority of China and desires to
maintain the dignity of a superpower by the United States push both the countries into the cold
war. To become a superpower China has been stared to expand its economical boundaries and
defence of the country. And in the return of the same United States is trying to suppress the
economic growth of China by imposing various new trade policies, tariffs policies, and
immigration policies. And in the response of the same taxation policies by China created trade
war which is affecting the whole globe. This discussion also concludes that although both the
economies have their strengths and weakness that creates interdependence with each other yet
both the countries jumped into a trade war.

Relationship: China and the United States 9
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