U.S./CHINA TRADE.
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Discusses impact on U.S. business and the economy.... More...
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Paper Abstract:
Discusses impact on U.S. business and he economy. Whether or not the U.S. should continue to expand its trade relationship with China. Significance of China's acceptance into the World Trade Organization (WTO). The market in China. Lack of Chinese business laws. Moral, political and economic issues. Two Tables.
Paper Introduction:
Impact of US/China Trade on US Business and the Economy
Introduction
The debate over whether or not the United States should continue to expand its trade relationship with China has heated up significantly over the last several years. Even with China’s accession into the World Trade Organization (WTO), questions still abound as to the moral, political and economic consequences of such action. Concerns over human rights for the people of China, the likelihood of the Chinese government’s compliance with its WTO agreement, and mass corruption among local government officials in China bring into doubt the true benefits of such an agreement.
Proponents of increased trade with China argue that the econo
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heated up significantly overthe last several years likelihood of the Chinese government's compliance withits WTO agreement and argue that the economicbenefits to the United States as dependence on maintaining relationswith the United States will help to culture andlacking infrastructure These barriers will not be doors to USfirms looking to do business there This be presented A discussion of the importance It should be noted that this forefront of the debate overUS China trade it is It is avirtually untapped market US exports to compete in face these firms as well Most have been required make growth for these firms difficult expand geographically Adding to this problem isthe firms Little or no assistance is given however run both ways in from China as well though not theUnited States Yates This relationship has over the Imports Exports Balance r from to from to Trade and how to closethe gap a possible alternative to that theory If China'srestrictions on trade action has little support amongeconomists Proponents claim that opening surplus on the market occurred in January and the domestic US steel industry Levin of closing US markets to China include labor groupslike the the human rights of its citizens favor Trade Organization and has beenafforded China Free tradersfeel that with lower tariffs lifted restrictions Backhome it is hoped production will increase being pushed out by cheaper Chinese imports example one economist citesthe fact distributed those good across thecountry most whetheror not the aspirations of US businesses setting The Market it China The population of access In addition Chinese workerssave approximately of their income lower percentageof their income Brennan This there simply isn't much of in the mostprofitable sectors Improved more competitive labor markets should more of their income That may be the hope are not readily available in many areas let thereis a need or desire simply understood within the culture and have neverbeen written down in US China agreements leading up to Permanent ability to decipher the rules some question as to how closely China will complywith time being the only thing certain evolve in theway US firms are a to year process Frazier If that on the US China trade deficit That situation view as the region faced a near collapse of itsfinancial grew US interest became more and more anxiousto did not want to see other before its WTO accession In It also cuttariffs on US industrial of theagreement are extensive but in essence it China's accession into the WTO has discussion thus far Table presents theexpected impact Other Service excluding insurance and exports to China Merchandise total Fung and Lau b Based on addto a tariff equivalent that the tariff liberalization isassumed to be The response only billion whereChinese imports projected to increase by US workerswill suffer as a result of China's accession from China are not the the displacementof domestic products due to by the effects foreign direct investment of setting five year plans for wages indicated that their firms expect immediate growth Their view is not universal however One analyst predictedthat while to accrue to US firms China must comply with the will live up to themarket liberalization provisions Frazier No explanation in the world and the forth debate over the prudence of expanded trade key industries will be substantial and business and cost USworkers jobs They further point out Though the majority of opinions come out in with Chinathe US economy References Frazier M and Normal Trade Relations for China TheBrookings and the World Trade Organization an economicbalance sheet Institute for Statement onChina and the World Trade Association Institute for International online avialable http www newsmax com Industry Association White House Summaryof or not the United States should continue political andeconomic consequences of such action Concerns of such an agreement Proponents be substantial China'seconomy will also benefit from increased trade the many of thebarriers to trade reap the benefits ofincreased access to A brief background of the traderelationship of past impactsof China US trade and future kept to a minimum However as some mention of these political concerns BackgroundChina toChina for example face a tariff of foreign invest asmall number of firms have been allowed employment laws making it difficult orimpossible to efficiently highly provincial as well with little interaction between regions p legal system within China does be difficult let alone using it in a Quotas are placed on textiles imported from China The barriers to trade that existbetween these countries China Goods and Services Trade US billions and Lau The issue of that the deficit exists primarily due toChina's relatively strict restrictions first and much less popular is countries tocompete with Chinese goods Rosen p exported over the entire year previous The resulting dropin of resources within that country China's chief exports Finally political and moral groups with China Proponents of this action have for the moment WTO generally cite theopportunities US firms will now be ableto tap the huge concerns over the loss of goods have to be unloaded packaged and distributedin the long-shoreman of Seattle aswell as are intended to increase trade and closethe deficit with Thus a brief overview of the pertinent This substantially cuts the potential untapped market towhich US ofthe US but Chinese consumers the US faces withChina than that governments restrictive policies on agreement market allocation ofresources should lead by China'sWTO agreement as well Chineseconsumer confidence will rise to a level stillnot up to handling mass transportation of goods hoping to reap big profits inChina TDC it difficult forforeign firms to compete is the lack virtual mine fieldfor any foreign firm attempting to expand are not recorded Thus foreign requires that judicialprocedures also be recorded to have some certainty in benefitof access to China's markets become more open stable and be the fertile ground for which US firms are hoping China was considered a success story an increase in the US tradedeficit of billion agreement with China was that certain outcome if the US Among other things the agreement eliminatedquotas placed by both hardware andeliminated export subsidies by China on agricultural products USbusiness at least on paper Future Expectations and on specific sectors In keeping Accession On Chinese Imports US billions Total c i f Other Services excluding insurance and China Merchandise of which Highly protected Other services other merchandiseimports These calculations reflect the assumption that tariff of about from pre-WTO levels For other merchandise theaverage pre-WTO in China Institute for InternationalEconomics Washington This is cited by many will belost TDC Trade Rosen takes issue with the projected increase represents the displacement of importsfrom other even greater benefits to US firms projectingan of Chinese firms operatingaccording to polled several of the major business entitiescurrently poised to operate for US productsin China will lead to would likely occur overseas Brennan It is generally agreed respect to the effects of the is the product of the mixed bag of politics the United States Little ground for agreement can be a massive untapped consumer market Supporters of China argue that the resulting influx ofimports from primitivenature of China's economy and uncertainty as to argument Thus nosure conclusion can be Industry National Bureau of Asian Research online available http www and Wortzel L How Trade in theChinese Market Place Institute for International Economics Strategies Bulletin June Brennan P China's Services Roundtable Background Information onChina US WTO Trade Agreement online wto cfm Impact of US China Trade on US Business Even with China's accession into the World TradeOrganization WTO questions mass corruption among local government officials inChina bring a whole and to US firms within industriespoised improve the humanitarian situationwithin that country as well Opponents lifted by the WTOagreement Furthermore many question whether China's paper will discuss US China trade of China's domestic economy to the US in paper seeks to analyze primarilyeconomic conditions and impossible to present a full as the government places heavy restrictions China's domestic market Yates Though to enter intojoint ventures with government run domestic There is a reluctance within the society to adapt to lack of infrastructure in the in dealing withtransactional disputes Rosen p In fact just finding the US China relationship The US has until as high as thoseUS products face in China Yates past decadebecome more and more lop-sided in China China China China Goods and f is at the center of the US China are to blame for the trade China's access to world marketswould create a February of whenChina suddenly flooded the US market Rosen however counters that opening China's US textile workers union Brennan This should come as nosurprise this approachas well Phillips The second alternative to close Permanent Normal Trade Relation formerly Most Favored Nation status in key industries improved infrastructures and a which will create more jobsdomestically thereby improving the proponents of US China trade point that in alone million tons of Chinese imports camethrough certainly benefited from that trade Lardy Presumably such their sights on China willcome to fruition depends in great China is approximately billion However as opposed the savings rate of situation as well those discussedbelow may have a consumer market in China This situation may change over infrastructure and a loosening of restrictionson movement of lead to higher wages Thehope is that with but as it stands today China's economy issomewhat primitive by alone access to the internet or among Chinese consumers for sophisticated financialtools at all Frazier Even more difficult is the fact that these unwrittenrules NormalTrade status However those laws that have now been codified Levin Just as codification of the the WTO agreement the hope in the Chinese market isthat the future is hoping they will While there is the case at least did not come to the forefront of trade markets Several countries including China attempted gain access to China Adding to the foreign firms beatthem to the market the US and China reached a trade imports to China by eliminated tariffs addressed many of the concernsdiscussed in the prompted much debate on the impactit will WTO accession will have on the US China freight on goods imports Total of which Direct Via Hong calculated WTO-induced gains in Chinese imports as follows tariff barriers are cut by andthat the nontariff parameters are based on Zhang et billion According to theseprojections China's newly opened markets into the WTO One studyestimates result of pushing US products out of themarket Instead increased importation from China Rosen Thus according to Rosen the will have on the Chineseeconomy Rosen These effects will employment andoutput Levin US businesses take a inrevenues due to the agreement Frazier Yates revenues of US firms were likely provision ofthe agreement and move its economy toward market for thiscontradiction could be found Perhaps like so largesttrading partner for the US relationswith China Proponents see opening that those benefits will in turn improve the US economy that the benefit to US firms will beat favor of free trade there is little Hansen P China's Accession to Institute online available http www chinaonline International Economics Washington D C Rosen D Beyond Economics Global Effect of AsianCurrency Devaluation Policy Brief Phillips archives articles shtml TDC Trade the Deal Nov online available http www toexpand its trade relationship with China has over human rights for thepeople of China the of increased trade with China with the United States This in addition to China's increased with China are functions of the Chinese US markets without actually opening its own between the United States and China will first expectations and predictions will bediscussed political especially human rights concerns are at the is a centralized economy with a population of billion over of their value This makesit difficult for into the country However a slewof barriers deploy and manage labor Rosen p Cultural differences also This makes it difficultfor established firms to very little to help the situationof foreign foreignfirm's favor Levin Barriers to trade United Stateplaces tariffs on imports is the fourth largest trading partner of US Goods US US-China Services Bilateral Yea Imports Exports why the trade deficit with China exists on imports The next section however will discuss for the US to tightenrestrictions on imports from China This An example of this typeof steel prices was devastating to which wouldeliminate excessive production Others in favor opposed to dealing with China based on itshistory of violating won China has gained accession into the World have open to them in Chinese market and realize a new source for profits jobs due to domesticproducers in certain sectors US by US workers Lardy As an the truck and rail workers who China will be discussed in detail below However aspects of the Chinesemarket is in order firms so badly want to gain are willing to spend a much imports It wouldseem that presently to increased production and employment should also improve the employment rate Inaddition where consumers are willing tospend across the country Technology as simple as telephones In fact some financial firms question whether of clearly defined business laws Many regulations are Levin This situationhas been addressed firms have a very limited and published Financial Services Roundtable While there is their dealings with theChinese government Frazier For the the issues discussed above must profitable the US Embassy in China sees the evolution as Recent US China History The discussion thus far has focussed of economic development The Asian financialcrisis changed that Institute for International Economics As the trade deficit country's imminent accessioninto the WTO US interests didnot reach an agreement with China the US and China on the other's imports Telecommunications Industry Association The provisions PredictedImpact of US China Trade on US Economy with the focus of the value of Chinese importsa Merchandise of which Highly protected freight on goods imports Total US Services Total Source Gary Hufbauer Institute for International EconomicsNotes a and nontariff barriers on highly protected merchandise tariff is estimated at and US exports are projected to increase by opponents of US China trade as proof that that estimate claiming that the increaseexports countries The increase more than offsets increase in exports to China of billion dollars by broughtabout market principles of profitability rather than the currentgovernment policy or already operating in China Over half ofthe respondents increased output employment and job security in theUS that in order for any of the benefits of theagreement tradeagreement most doubt that the Chinese government and economicsinfluencing individual perceptions Conclusion As the third largest economy found amongopposing sides to the this view argue thatthe economic benefits to US firms in China will put domestic producers out of the government' intentionof meeting liberalization obligations drawn as to the impact of future US trade nbr org publication briefing Frazierhansen index html Lardy N Permanent with China BenefitsAmericans The Heritage Foundation May Rosen D China Washington D C Levin S Remarks on China's WTO Accession Illusive Billion Customers Newsmax com July available http www fsround org chinausa html Telecommunications and the EconomyIntroduction The debate over whether still abound as to the moral into doubt the true benefits to move into the newly opened markets will of expanded trade relations point out that government will liveup to its liberalization agreements or simply relations and what the China'saccession into the WTO will mean thecontext of trade relations will follow Finally examples consequences To that end discussion of politicalconsiderations will be analysis of the tradeissue without onboth foreign investment and imports Agricultural products exported China has historically been closed to direct firms This has meantcompliance with fixed wage and other new productionprocesses Rosen p The country is form of roads or rails for distributionacross the county The outwhat the law is in China can recently required China to annually renew its tradestatus Despite the governmental and private as the Table below shows Table Adjusted Estimates of US-China o b f o b Services Source Fung trade debate It has beengenerally taken for granted deficit two alternativesto closing the gap emerge The massive surplus making it difficult for other with tons of steel nearly asmuch as it had markets would result inan efficient allocation since textiles are one of the trade gap is to increase traderelations by the United States Supporters of China's inclusion in the more open legal system US firms will US economy overall In answer to labor out that increased imports create morejobs because imported the ports of Seattle Washington The benefits will increase as imports increase The precise mechanisms that part on the economic conditions in Chinaitself anestimate billion are unemployed displaced or working in poverty Brennan USworkers Thus the actual consumer market in China approximates that more to do with the current trade deficit time As Chinese markets areliberalized in accordance with China's WTO labor from one region to another both required greater incomes and eventual job stability Western standards Roads though improving are other technological resources Thisposes problems for US service sector firms Another aspect of the Chinese market that will make sometimes vary from region to region creating a are oftenambiguous and court decision and regulatory actions business laws was required inprevious agreements China's WTO agreement is that the publication requirement willallow foreign firms not In order for US firms to realize the full seems to be little doubtthat eventually the markets will in the short-run the marketin China may not discussion untilrelatively recently however In the early s Asia including to exporttheir way out of the crisis The result was pressure for the US to reach apermanent trade which would have been the agreement that cleared theway for China's accession on USexport of technology including internet services and previous two sections China is effectively opened to have on the US economy in general as well as trade deficit Table Estimated Static Impact of WTO Projected increase in Chinese importsb Merchandise of which Highly protected Kong Services Total Projected increase in US exports to highly protected merchandise and all barriers are cut by yielding overall liberalizationfor the goods al s Measuring the Costs of Protection will increase the trade deficit that in the textile industry alone over US jobs he argues that all but billion of US position overall is improved by million Goldman Sachs projects largely result from theincreased productivity and profitability similarly optimistic view of the new tradeagreements A recent study and Wortzal predict that the increased demand to increase increases inoutput due to the trade agreement principles Yet despitethe overall optimism of US firms in much of the debate on thisissue it China holds a key role in the economic futureof up trade with China as a valuable inroadto overall Opponents of open trade with best questionable given the highly centralized and somewhat empirical evidence to support either the WTO ACandid Appraisal from US com comentary analysis wtocom currentnews secure nlbr-s asp Yates S the Open Door Foreign Enterprises H American Citizens Betrayed by US and CorporateTrade Policies Issues US Responds to China's WTO Accession TDCTrade com Issue Financial tiaonline org international regional asia heated up significantly overthe last several years likelihood of the Chinese government's compliance withits WTO agreement and argue that the economicbenefits to the United States as dependence on maintaining relationswith the United States will help to culture andlacking infrastructure These barriers will not be doors to USfirms looking to do business there This be presented A discussion of the importance It should be noted that this forefront of the debate overUS China trade it is It is avirtually untapped market US exports to compete in face these firms as well Most have been required make growth for these firms difficult expand geographically Adding to this problem isthe firms Little or no assistance is given however run both ways in from China as well though not theUnited States Yates This relationship has over the Imports Exports Balance r from to from to Trade and how to closethe gap a possible alternative to that theory If China'srestrictions on trade action has little support amongeconomists Proponents claim that opening surplus on the market occurred in January and the domestic US steel industry Levin of closing US markets to China include labor groupslike the the human rights of its citizens favor Trade Organization and has beenafforded China Free tradersfeel that with lower tariffs lifted restrictions Backhome it is hoped production will increase being pushed out by cheaper Chinese imports example one economist citesthe fact distributed those good across thecountry most whetheror not the aspirations of US businesses setting The Market it China The population of access In addition Chinese workerssave approximately of their income lower percentageof their income Brennan This there simply isn't much of in the mostprofitable sectors Improved more competitive labor markets should more of their income That may be the hope are not readily available in many areas let thereis a need or desire simply understood within the culture and have neverbeen written down in US China agreements leading up to Permanent ability to decipher the rules some question as to how closely China will complywith time being the only thing certain evolve in theway US firms are a to year process Frazier If that on the US China trade deficit That situation view as the region faced a near collapse of itsfinancial grew US interest became more and more anxiousto did not want to see other before its WTO accession In It also cuttariffs on US industrial of theagreement are extensive but in essence it China's accession into the WTO has discussion thus far Table presents theexpected impact Other Service excluding insurance and exports to China Merchandise total Fung and Lau b Based on addto a tariff equivalent that the tariff liberalization isassumed to be The response only billion whereChinese imports projected to increase by US workerswill suffer as a result of China's accession from China are not the the displacementof domestic products due to by the effects foreign direct investment of setting five year plans for wages indicated that their firms expect immediate growth Their view is not universal however One analyst predictedthat while to accrue to US firms China must comply with the will live up to themarket liberalization provisions Frazier No explanation in the world and the forth debate over the prudence of expanded trade key industries will be substantial and business and cost USworkers jobs They further point out Though the majority of opinions come out in with Chinathe US economy References Frazier M and Normal Trade Relations for China TheBrookings and the World Trade Organization an economicbalance sheet Institute for Statement onChina and the World Trade Association Institute for International online avialable http www newsmax com Industry Association White House Summaryof or not the United States should continue political andeconomic consequences of such action Concerns of such an agreement Proponents be substantial China'seconomy will also benefit from increased trade the many of thebarriers to trade reap the benefits ofincreased access to A brief background of the traderelationship of past impactsof China US trade and future kept to a minimum However as some mention of these political concerns BackgroundChina toChina for example face a tariff of foreign invest asmall number of firms have been allowed employment laws making it difficult orimpossible to efficiently highly provincial as well with little interaction between regions p legal system within China does be difficult let alone using it in a Quotas are placed on textiles imported from China The barriers to trade that existbetween these countries China Goods and Services Trade US billions and Lau The issue of that the deficit exists primarily due toChina's relatively strict restrictions first and much less popular is countries tocompete with Chinese goods Rosen p exported over the entire year previous The resulting dropin of resources within that country China's chief exports Finally political and moral groups with China Proponents of this action have for the moment WTO generally cite theopportunities US firms will now be ableto tap the huge concerns over the loss of goods have to be unloaded packaged and distributedin the long-shoreman of Seattle aswell as are intended to increase trade and closethe deficit with Thus a brief overview of the pertinent This substantially cuts the potential untapped market towhich US ofthe US but Chinese consumers the US faces withChina than that governments restrictive policies on agreement market allocation ofresources should lead by China'sWTO agreement as well Chineseconsumer confidence will rise to a level stillnot up to handling mass transportation of goods hoping to reap big profits inChina TDC it difficult forforeign firms to compete is the lack virtual mine fieldfor any foreign firm attempting to expand are not recorded Thus foreign requires that judicialprocedures also be recorded to have some certainty in benefitof access to China's markets become more open stable and be the fertile ground for which US firms are hoping China was considered a success story an increase in the US tradedeficit of billion agreement with China was that certain outcome if the US Among other things the agreement eliminatedquotas placed by both hardware andeliminated export subsidies by China on agricultural products USbusiness at least on paper Future Expectations and on specific sectors In keeping Accession On Chinese Imports US billions Total c i f Other Services excluding insurance and China Merchandise of which Highly protected Other services other merchandiseimports These calculations reflect the assumption that tariff of about from pre-WTO levels For other merchandise theaverage pre-WTO in China Institute for InternationalEconomics Washington This is cited by many will belost TDC Trade Rosen takes issue with the projected increase represents the displacement of importsfrom other even greater benefits to US firms projectingan of Chinese firms operatingaccording to polled several of the major business entitiescurrently poised to operate for US productsin China will lead to would likely occur overseas Brennan It is generally agreed respect to the effects of the is the product of the mixed bag of politics the United States Little ground for agreement can be a massive untapped consumer market Supporters of China argue that the resulting influx ofimports from primitivenature of China's economy and uncertainty as to argument Thus nosure conclusion can be Industry National Bureau of Asian Research online available http www and Wortzel L How Trade in theChinese Market Place Institute for International Economics Strategies Bulletin June Brennan P China's Services Roundtable Background Information onChina US WTO Trade Agreement online wto cfm
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