Page 14 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
1.1 US-China Trade
The US trade deficit with China in 2017 was American Civil War and the Great Depression. Irwin
roughly US$375 billion. The trade deficit leaves the possibility open that the Trump precedency
existed because US exports to China were only US$130 may become another turning point in US trade policy
billion while imports from China were US$506 billion. (Irwin, 687). In The Soul of America: The Battle for Our
Putting this in a little perspective, the US imported about Better Angels, presidential historian Jon Meacham
US$77 billion in computers and accessories, US$70 traces the various difficult aspects of US history from
billion in cell phones, and US$54 billion in apparel and slavery to McCarthyism. Meacham’s basic premise is
footwear that year. Most of these products are from US that bad things have happened in American history.
manufacturers that send raw materials to China for low- Combatting these bad things is a consistent process, but
cost assembly. Once shipped back to the US, they are the retroactive forces are constantly present. Although
considered imports. That same year, China imported the US has generally moved forward to produce a
US$16 billion in commercial aircraft, US$12 billion in better nation, understanding the past is essential to
soybeans, and US$10 billion in autos from America. adjusting toward solutions (Meacham, 439). In A World in
China can produce many consumer goods at lower costs Disarray: American Foreign Policy and the Crisis of the Old
than other countries can. Most economists agree that Order, Richard Haas argues that longstanding divisions
China’s competitive pricing is a result of two factors: an such as cultural conflicts, economical inequalities and
exchange rate that is partially fixed to the US dollar and immigration control exist in the US and globally as a
China’s ability to pay lower wages because of a lower result, at least in part, from globalization and rapid
standard of living for most of its citizens. Consumers back technological developments, and may have been
home will eventually have to pay much higher prices exacerbated by slow economic growth in the US and
for their “Made in America” goods if the US continues to abroad since the Great Recession of 2008. Governments
implement trade protectionism, and it is rather unlikely have simply not formulated effective domestic
that the trade deficit will change. The bottom line is policies on how to address the social and economic
that most people in the US would rather pay as little as consequences in the new era, and frequent reversals
possible for computers, electronics, and clothing, even if in US foreign policy are not helpful (Haas, 306). These
it means other Americans lose their jobs. three authors explain in various degrees the long history
of the delegation of congressional trade authority to
Context the president and the growth of executive authority
in foreign affairs. These developments should not be
Economist Douglas Irwin makes three legitimate understated given the current trade conflict since the
points in his 2017 book Clashing over Commerce: a current US president has increasingly relied on both
history of US Trade Policy. First, the three main purposes the broad delegation of trade authority and the past
of the US trade policy have traditionally been the expansion of presidential authority in foreign affairs.
three Rs: Revenue, Restrictions, and Reciprocity. The His reliance on national security as a rationale for trade
US first collected tariffs historically to increase national actions is unprecedented (Malawer).
revenue. Then, the country restricted imports with
tariffs to help domestic industries before moving to The US trade deficit with China expanded dramatically
reciprocity as the basis of the modern trading system. beginning in the early 2000s from an average of US$34
This is the genesis of trade relationships such as the billion in the 1990s. Some economists refer to this as
WTO and the GATT. Second, tariff policy has always the China Shock and attribute it to the unexpectedly
been the result of clashing economic interests such as rapid growth of China’s export manufacturing sector
between manufacturers and consumers. Third, changes in the late 1990s. This happened as Beijing undertook
in trade and tariff policies were the direct result of the deep economic reforms and implemented policies to
14
1.1 US-China Trade
The US trade deficit with China in 2017 was American Civil War and the Great Depression. Irwin
roughly US$375 billion. The trade deficit leaves the possibility open that the Trump precedency
existed because US exports to China were only US$130 may become another turning point in US trade policy
billion while imports from China were US$506 billion. (Irwin, 687). In The Soul of America: The Battle for Our
Putting this in a little perspective, the US imported about Better Angels, presidential historian Jon Meacham
US$77 billion in computers and accessories, US$70 traces the various difficult aspects of US history from
billion in cell phones, and US$54 billion in apparel and slavery to McCarthyism. Meacham’s basic premise is
footwear that year. Most of these products are from US that bad things have happened in American history.
manufacturers that send raw materials to China for low- Combatting these bad things is a consistent process, but
cost assembly. Once shipped back to the US, they are the retroactive forces are constantly present. Although
considered imports. That same year, China imported the US has generally moved forward to produce a
US$16 billion in commercial aircraft, US$12 billion in better nation, understanding the past is essential to
soybeans, and US$10 billion in autos from America. adjusting toward solutions (Meacham, 439). In A World in
China can produce many consumer goods at lower costs Disarray: American Foreign Policy and the Crisis of the Old
than other countries can. Most economists agree that Order, Richard Haas argues that longstanding divisions
China’s competitive pricing is a result of two factors: an such as cultural conflicts, economical inequalities and
exchange rate that is partially fixed to the US dollar and immigration control exist in the US and globally as a
China’s ability to pay lower wages because of a lower result, at least in part, from globalization and rapid
standard of living for most of its citizens. Consumers back technological developments, and may have been
home will eventually have to pay much higher prices exacerbated by slow economic growth in the US and
for their “Made in America” goods if the US continues to abroad since the Great Recession of 2008. Governments
implement trade protectionism, and it is rather unlikely have simply not formulated effective domestic
that the trade deficit will change. The bottom line is policies on how to address the social and economic
that most people in the US would rather pay as little as consequences in the new era, and frequent reversals
possible for computers, electronics, and clothing, even if in US foreign policy are not helpful (Haas, 306). These
it means other Americans lose their jobs. three authors explain in various degrees the long history
of the delegation of congressional trade authority to
Context the president and the growth of executive authority
in foreign affairs. These developments should not be
Economist Douglas Irwin makes three legitimate understated given the current trade conflict since the
points in his 2017 book Clashing over Commerce: a current US president has increasingly relied on both
history of US Trade Policy. First, the three main purposes the broad delegation of trade authority and the past
of the US trade policy have traditionally been the expansion of presidential authority in foreign affairs.
three Rs: Revenue, Restrictions, and Reciprocity. The His reliance on national security as a rationale for trade
US first collected tariffs historically to increase national actions is unprecedented (Malawer).
revenue. Then, the country restricted imports with
tariffs to help domestic industries before moving to The US trade deficit with China expanded dramatically
reciprocity as the basis of the modern trading system. beginning in the early 2000s from an average of US$34
This is the genesis of trade relationships such as the billion in the 1990s. Some economists refer to this as
WTO and the GATT. Second, tariff policy has always the China Shock and attribute it to the unexpectedly
been the result of clashing economic interests such as rapid growth of China’s export manufacturing sector
between manufacturers and consumers. Third, changes in the late 1990s. This happened as Beijing undertook
in trade and tariff policies were the direct result of the deep economic reforms and implemented policies to
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