The complicated and complex relationship between China and the United States spans the pages of history.
China has notoriously taken advantage of the goodwill shown by the United States on the financial front and the trading scene.
President Trump has been very open in his opinion about how for years China has been unfair in its trade practices with the United States.
President Trump: “China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade”.
Examples of unfair trading are:
- China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, overcapacity and industrial subsidies—that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.
- China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world.
- China imposes much higher tariffs on United States exports than the United States imposes on China.
- China’s average tariff rate is nearly three times higher than the average United States rate.
- Certain products are even more imbalanced. For instance, the United States charges a 2.5 percent tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States.
- China has banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods.
- China has dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry.
- In 2018 alone, the Trump Administration has found dumping or unfair subsidies on 13 different products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe.
- In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security.
- The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.
China has aggressively sought to obtain technology from American companies and undermine American innovation and creativity. There have recently been reports that China actively sends Chinese “agents” to the United States, often disguised as students, to learn about and steal new technologies and intellectual resources.
- The value of China’s intellectual property theft costs United States innovators billions of dollars a year, and China accounts for 87 percent of counterfeit goods seized coming into the United States.
- United States Trade Representative’s (USTR) Section 301 investigation identified four of China’s aggressive technology policies which put 44 million American technology jobs at risk:
- Forced technology transfer;
- Requiring licensing at less than economic value;
- Chinese state-directed acquisition of sensitive United States technology for strategic purposes; and
- Outright cyber theft.
- China uses foreign ownership restrictions, administrative review and licensing processes to force or pressure technology transfers from American companies.
- China requires foreign companies that access their New Energy Vehicles market to transfer core technologies and disclose development and manufacturing technology.
- China imposes contractual restrictions on the licensing of intellectual property and technology by foreign firms into China but does not put the same restrictions on contracts between two Chinese enterprises.
- China directs and facilitates investments in and acquisitions of United States companies to generate large-scale technology transfer.
- China conducts and supports cyber intrusions into United States computer networks to gain access to valuable business information so Chinese companies can copy products.
President Trump has begun taking long overdue action to finally address the source of the problem, the unfair trade practices of China which hurt America’s workers and our innovative industries.
The Chinese Revolution of 1949
On October 1, 1949, Chinese Communist leader Mao Zedong declared the creation of the People’s Republic of China (PRC). The announcement ended the costly full-scale civil war between the Chinese Communist Party (CCP) and the Nationalist Party, or Kuomintang (KMT), which broke out immediately following World War II and had been preceded by on and off conflict between the two sides since the 1920’s. The creation of the PRC also completed the long process of governmental upheaval in China begun by the Chinese Revolution of 1911.
The “fall” of mainland China to communism in 1949 led the United States to suspend diplomatic ties with the PRC for decades.
The outbreak of the Korean War, which pitted the PRC and the United States on opposite sides of an international conflict, ended any opportunity for accommodation between the PRC and the United States. Truman’s desire to prevent the Korean conflict from spreading south led to the U.S. policy of protecting the Chiang Kai-shek government on Taiwan.
For close to thirty years after the Chinese revolution of 1949, there were few contacts, limited trade and no diplomatic ties between the two countries.
Until the late 1970s, the United States continued to recognize the Republic of China, located on Taiwan, as China’s true government and supported that government’s holding of the Chinese seat in the United Nations.
History of Chinese Foreign Trade
Beginning in the late 1970s, China reversed the Maoist economic development strategy and, by the early 1980s, had committed itself to a policy of being more open to the outside world and widening foreign economic relations and trade.
The opening up policy led to the reorganization and decentralization of foreign trade institutions, the adoption of a legal framework to facilitate foreign economic relations and trade, direct foreign investment, the creation of special economic zones, the rapid expansion of foreign trade, the importation of foreign technology and management methods, involvement in international financial markets and participation in international foreign economic organizations.
These changes not only benefited the Chinese economy but also integrated China into the world economy.
In 1985, the United States had just begun a growing trade deficit with China. During the 1990s, the United States trade deficit became a more excessive long-running trade deficit, mostly with Asia. By 2012, the U.S. trade deficit, fiscal budget deficit, and federal debt had increased to record or near-record levels following the implementation of broad unconditional or unilateral United States free trade policies and formal trade agreements during the preceding decades.
China has seen substantial economic growth over a 50 year period, and at a nuclear-security summit which took place in early 2010, President Obama hoped to ensure another 50 years of growth between the two countries. On April 19, 2010, President Obama met with China’s President Hu Jintao to discuss trade policies between the two countries.
The U.S.–China Relations Act of 2000 was an act which granted permanent normal trade relations to China; it was signed on October 10, 2000, by President Bill Clinton.
Prior to passage of the bill, China was subject to an annual review of its trade status with the United States. The act removed the review, eased some trade barriers and facilitated China’s entry into the World Trade Organization.
Despite growing commercial ties, the bilateral economic relationship (between China and the United States) has become increasingly complex and often fraught with tension. From the United States’ perspective, many trade tensions stem from China’s incomplete transition to a free market economy.
While China has significantly liberalized its economic and trade regimes over the past three decades, it continues to maintain (or has recently imposed) a number of state-directed policies that appear to distort trade and investment flows.
Major areas of concern expressed by United States policymakers and stakeholders include China’s alleged widespread cyber economic espionage against US firms; relatively ineffective record of enforcing intellectual property rights (IPR); discriminatory innovation policies; mixed record on implementing its World Trade Organization (WTO) obligations; extensive use of industrial policies (such as subsidies and trade and investment barriers) to promote and protect industries favored by the (Chinese) government; and interventionist policies to influence the value of its (China’s) currency.
Many United States policymakers argue that such policies adversely impact our economic interests, and have contributed to United States’ job losses in some sectors.
United States-China trade rose rapidly after the two nations reestablished diplomatic relations in January 1979, signed a bilateral trade agreement in July 1979 and provided mutual most-favored-nation (MFN) treatment, beginning in 1980.
In that year (which was shortly after China’s economic reforms began), total United States-China trade (exports plus imports) was approximately $4 billion.
China ranked as the United States’ 24th largest trading partner, 16th largest export market and 36th largest source of imports. In 2017, total U.S. merchandise trade with China was $636 billion, making China the United States’ largest trading partner.
Currently, President Trump is attempting to turn these failed trade policies around. The required chnages will not happen without some suffering, but once the pain is over, America will prosper again. The liberal left has been pushing their New World Order for some time now, and President Trump’s new China policy could turn the tables on the globalists.