Title: The US-China economic relationship: A comprehensive approach
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The US-China economic relationship: A comprehensive approach
Executive Summary
Joshua P. Meltzer
Senior Fellow - Global Economy and Development
Neena Shenai
Visiting scholar - American Enterprise Institute
The state of the bilateral economic relationship
Why China’s economic model matters
The impact on the WTO
Making progress in US-China economic relations
Bilateral negotiations
The role for the WTO
Work with US allies
Unilateral US action

Content: Resolving U.S.-China differences in a meaningful way will take time. The state of the bilateral economic relationship
In order to assess what might constitute a sustainable economic relationship going forward, it is important to be clear about the costs and benefits of U.S. trade and investment with China. The U.S.-China economic relationship delivers more benefits to the U.S. than is commonly understood. For example, recent data shows that U.S. exports to China support around 1.8 million jobs in sectors such as services, agriculture, and capital goods. [ 1 ] However, trade with China has also led to job destruction in some U.S. industries—particularly low wage manufacturing. Despite these costs, the frequent focus by the administration on the bilateral deficit is not a meaningful yardstick for assessing U.S.-China trade or its impact on employment. The U.S. trade deficit is less a product of restrictions on U.S. imports than it is a reflection of a low U.S. domestic savings rate, which requires overseas capital to fund U.S. domestic investment needs and the growth in U.S. government debt. In addition, the trade deficit does not account for the activities of affiliates of U.S. and Chinese companies in each respective market, a calculus that shows the U.S. selling more to China than vice versa. Nevertheless, the economic costs of the bilateral economic relationship are very real. China’s economic practices now risk harming the U.S. service and knowledge economy.