Title: The U.S.-China Economic Relationship: Separating Facts from Myths | Council on Foreign Relations
Headings: The U.S.-China Economic Relationship: Separating Facts from Myths
The U.S.-China Economic Relationship: Separating Facts from Myths
Myth No. 1: Washington has limited leverage because China is the main "banker" for the United States
Myth No. 2: The United States is heavily dependent on cheap Chinese goods
Myth No. 3: External pressure on China for policy changes is counterproductive.
Myth No. 4: Instability is bad for China

Content: The prices for goods that could substitute for products from China would be higher, but the difference in costs would be relatively small. Competition among producers has become fiercer, and as a result cost differentials between goods from China and other suppliers are narrowing. Dependence actually runs the other way. China is highly dependent on U.S. demand for its products. Economic growth in China is heavily dependent on exports. Although China has been able to achieve its 8 percent GDP growth target in 2009 owing to the stimulus to domestic demand provided by government policy actions, the country will struggle to meet this objective in 2010 and succeeding years if demand for its exports in the United States does not pick up. Myth No. 3: External pressure on China for policy changes is counterproductive. The Chinese authorities stress that in the face of external pressure, they tend to strongly resist economic policy changes.