Chinese State Councilor Yang Jiechi and newly-appointed U.S. Secretary of State Rex Tillerson recently discussed the improvement and maintenance of a strong economic relationship between the United States and China. The importance of regular engagement between the world economic superpowers was reaffirmed.
The Chinese state-run news agency quoted Yang as being willing to work with the Trump administration to broaden cooperative efforts while respecting each country’s interests.
A reasonable trade partnership promotes the sustainable development of a US/China relationship and benefits both countries as well as the rest of the world. Below is a look at the dynamics of this relationship and its effects on China, as well as US manufacturing.
The Benefits of a Strong Trade Relationship Between the US and China
The current trade relationship between the United States and China supports over 2.5 million U.S. jobs in a variety of industries. As China’s middle class grows US manufacturers will encounter many opportunities to tap into an increasing customer base. According to recent economic data countries trading with China outperform those that do not have a firm trade policy in place. The benefits to the U.S. economy from Chinese trade include:
- China manufacturers’ imports from the U.S. represented about 1% of the U.S. total economic output in 2015.
- US manufacturing companies sell cars, trucks, construction equipment and other high-value products to China as well as financial and business services. By 2030 the U.S. is expected to export $520 billion in products and services to China annually.
- China is one of the world’s fastest growing economies. It presents significant growth opportunities for U.S. firms if China continues economic reforms that remove barriers to their markets.
- Chinese trade manufacturing lowers U.S. prices on consumer goods inhibiting inflation and increasing American’s disposable income.
- Per Oxford Economics, US manufacturing capacity increased by almost 40% from 2003-2016.
https://www.uschina.org/reports/understanding-us-china-trade-relationship
Thoughts on the New Administration’s Policies
The U.S. and China manufacturing industries are at a crossroads for sustainable development. Both countries face pressure from the sluggish global trade economy as well as numerous security threats. China and the United States are obligated to work together to ensure global unity and development. Therefore, it’s to the world’s benefit for these two countries to continue the road to securing a solid trade relationship.
There are many ways trade “deals” between countries can be negotiated without raising prices on imported goods across the board. It looks as if China will remain a strong trade partner of the US for many years to come.
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