What is damaging the US and China's trade relations?



Abstract

America and China are two super powers of the world that posses a huge economy. China has risen to the market in import and export due to many reasons in the past few years. The diplomatic relations between the two countries were redeveloped after January 1979 and this gave a huge boost to U.S.-China trade and a bilateral agreement for the trade to improve the economy of the was signed in July, 1979. This paper will explore the issues that are damaging the trade relation between America and China. After having a analysis of the issues, the paper will end with the possible solution and recommendations for the major issues. Research question

What is damaging the US and the China trade's relations?

Introduction

In the beginning of the reforms that took place in China in 1979, the economy of the important and the import was evaluated to be $2 billion and was 45th in ranking as being the trading partner. From then, there has been a great progress in the trade relation and it reached the economy of $503 billion and became the second-largest U.S. trading partner. Irrespective of all the growth, there have been many factors and issues that damaged trade relations between two countries.

Background

After the reforms that had been introduced by the Deng Xiaoping as a an attempt towards the liberalization, there was a huge change occurred in the economy of China that also change the statistics of the international market. This growth changed the pervert rate and the financial conditions of the country as well. There have been strong investment ties between two countries. The back ground of the economical growth and the trade relations is tied to two major points, holdings of U.S. securities and foreign direct investment (FDI).

A measurable and huge share that is related to the China's investment in America is made up of U.S. securities where as the FDI comprises of the investment that had been made by the USA in China.

Issues

Although the expansion of the trade relations had a positive impact on the economy of both the country but the there are many factors that became the cause of damaging these trade relations regarding many issues but few issues are of the main concern. The major concerns are, China refused to adopt market-based currency. Further, there have been many problems regarding the WTO as it was obliged to follow it as China failed to safeguard the U.S. intellectual property rights (IPR). Further the topic regarding the industrial policies that were used to promote a variety of domestic industries, that particularly comprises of discriminatory government procurement policies. These policies and the issues had been a real bone of contention between the countries. The critics in America are of the view that the China has made the original value of the 40% below what its value would otherwise be on the open market. This is done artificially in order to make the goods that are ...