Title: U.S.-China trade war has its seeds in the financial crisis
Headings: U.S.-China trade war has its seeds in the financial crisis
U.S.-China trade war has its seeds in the financial crisis
David Dollar
Senior Fellow - Foreign Policy, Global Economy and Development, John L. Thornton China Center
Growth machine
The debt equation
Urging openness
How we got here
Order from Chaos

Content: Exports were expanding at more than 20 percent per year and GDP growth reached as high as 14 percent in 2007. Still, China was a small player in the world economy. U.S. GDP was 400 percent larger than China’s in 2006, measured in current dollars. It was always likely that a reforming China would gradually catch up with the United States, but the crisis greatly accelerated the process. With its massive stimulus, China quickly rebounded to double-digit growth rates. The United States, on the other hand, was mired in slow growth for a decade. The U.S. financial system was the locus of the crisis and there is a large literature documenting that recovery from financial crisis is a long slog. In 2006, China’s GDP in current U.S. dollars was $2.8 trillion; by 2017, that had ballooned to $12.2 trillion. U.S. GDP in 2017 was only 58 percent larger than China’s.