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: Without a hard push from the United States on a bilateral and multilateral basis, changes in China’s policies are likely to be delayed, and that is not in the best interest of the United States and the rest of the world. Myth No. 4: Instability is bad for China
Chinese authorities also have suggested that instability in China is bad for the rest of the world because of adverse effects on China’s growth rate. But instability (or the fear of instability) has played a big role in initiating economic policy changes in China. For example, concern about instability arising from the growing gap between urban and rural incomes has been a major factor behind new initiatives to develop China’s interior (such as the Develop the West program) and to improve conditions and opportunities for the rural population (including breaking down restrictions and discriminatory treatment of migrant workers). Hence, for China, instability is not necessarily bad, but it is a problem for the authorities. Instability in China also is not necessarily bad for the rest of the world because of its effect on China’s growth. Although China accounts for a significant portion of world GDP growth, the country does not generate much demand for products from other countries given China’s large trade and current account surpluses. Some countries in Asia and commodity producers may be benefiting from China’s strong growth, but overall, it is not providing much stimulus for the world economy as a whole, so slower growth in China will have little effect on economic activity in the rest of the world.