The United States’ soaring and orderly goods trade deficits with China is one of the main political reasons dividing the world’s two largest economies. In 2018 alone there was an increase of 20 percent compared the previous year.
Wilbur Ross, the U.S. Commerce Secretary, stated that the Beijing and Washington were miles away from any agreement in sight. After all, U.S considers China to be a competitor and a revisionist power bent on upending the American world order.
Interestingly, the financial and economic analysts do not view this strategic assessment as a key detail in the details between Washington and Beijing. Their outlook is based on the view that the Chinese economy is disintegrating and the news leakage from the trade negotiations.
However, the Chinese economy is not exactly falling apart. In fact, Beijing has put in place several management instruments to help stabilize the economic growth between 6 to 6.5 percent.
Some people also believe that the economic statistics of China are fake numbers. It is time for people to come to their senses. Washington is dealing with a country, whose economy has played a critical role in the international monetary system. The economic structure, performance, and policies of China are examined regularly by the International Monetary Fund, U.N. agencies as well as the Organization of Economic Cooperation and Development.
When someone claims that China’s financial and economic numbers are fake, they are also saying that all the above organizations of which the U.S. is a principal member, are also fake. This could not possibly be true.
The recently released figures by the U.S. Bureau of Economic Analysis shows that while American goods exported to China amounted to $102.5 billion, about $447 billion worth goods were imported to America from China in the first ten months alone. This shows a huge $344.5 billion gap, which accounts for almost a half of United States’ total trade gap.
This unbalanced bilateral trade needs to be corrected. While both the countries recognize that, they do not seem to mutually agree on an acceptable procedure to reach the required trade adjustment.
Logically, the situation calls for an increase of U.S. products to China and a decrease in Chinese export to the U.S. In order to do this, China needs to broaden market access to U.S. firms, deal with market-distorting trade practices like export subsidies, forced technology transfers, illegal acquisitions and so on.