U.S. - China Bilateral Relations: Trade Tensions Due to Market Economy Transition - Research Paper

Introduction

For a long time, China and the United States (the U.S.) have had close business ties. Recently, though, the complexity of the bilateral relationships between the two countries has amplified, resulting in tension (Zhu, Yang, Feng). According to the U.S., most trade tensions emerge from the act of China of performing a rough transition to the market economy that is considered free (Zhu, Yang, and Feng). Although there are notable advancements in terms of liberation of financial as well as trade regimes in China, over the past years, it continues to implement many state-directed laws that seem to interfere with trade together with the flow of investments (Zhu, Yang, and Feng). The primary area that raises the alarm according to the U.S. includes the policies that discriminate innovation, the mixed record of China in its WTO obligation implementation, and the extensive application of its industrial systems to favor some firms. Besides, other areas that raise concern include interventionist strategies of influencing currency value, as well as the allegation of the nation's extensive fake fiscal espionage against America (Zhu, Yang, and Feng). According to U.S. policymakers, such policies have greatly influenced the financial interests of American and has resulted in unemployment in some sectors.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

According to the U.S., the behavior portrayed by China undermined the roles of World Trade Organization (WTO), which both are parties. WTO is purposed to formulate, manage as well as enforce the laws of international trade (Baldwin 95). The organization allows members to acquire high financial growth levels using lower tariffs, reduced barriers of business, and multilateral trade (Baldwin 95). The U.S. played a significant role in the formation of WTO. America was one of the principal founders of the organization and were members of its predecessor. Therefore, if any member is going against the organization's principle, they will make an effort to correct the situation (McGillivray). The benefits of WTO is evident, as it has resulted in a successful trade, peace, tourism, as well as safety in member states (McGillivray). It is through the organization that has created free trade together with open borders and promoting the interest of the nation, which is a critical goal in U.S. foreign policy. The organization is beneficial to U.S. and member states as it creates high paying jobs because of trade (McGillivray). As a result, it resolves the trade dispute, enhancing democratic values, therefore, promoting economic growth in the U.S. (McGillivray). The organization is, therefore, essential to the member state and other nations worldwide. As peace prevails in member states, other countries who are not under WTO can comfortably carry out business with member states making them earn revenues. The member states, therefore, should work in hand to promote the organization's success.

Currently, the Administration of Trump has pledged that it will use different ways to minimize the deficits of US bilateral trade (Zhu, Yang, and Feng). According to the U.S., more policies that are aggressive will help solve the problem. The inaction of trade policies and agreements will help answer some challenges the country is facing. Holding discussions concerning bilateral trade deficits with convey representing the countries of interest is crucial. The representations of different states will talk to air out their concerns about the state of the nation and their plans to overcome trade challenges among the countries if existing. They will set rules which they should abide with to ensure that they do not suffer economically. The method is one of the best ways to use in case there are trade disputes among different nations. What the representations of different countries have passed emerges to be the stand of the whole country.

Another policy is promoting free as well as fair trade (Zhu, Yang, and Feng). The method has been applied in many regions worldwide and to some extent, has been considered to have yield positive results. The technique promotes trade and peace among the nations. Countries, therefore, produce the gods they are best at and sells them to other nations at a good profit fostering economic growth for both nations. The business flourishes improving the living standard of different people among the countries at it creates more job opportunities. Because of constant interaction, it is possible that peace can prevail among the nations. The disadvantages of the policy to the U.S. is, because of its status in terms of development, some people from other countries may take advantage and acquire jobs and businesses that could have been owned by US citizens. As a result, it can lead to increased unemployment rates in the U.S.

Additionally, to solve the problem, the Federal government levied tariffs on steel as well as aluminum (Zhu, Yang, and Feng). Twenty-five percent increased taxes on iron, and ten percent on aluminum resulted in more loses that China incurred. Since China is the largest producer of both two metal, it suffered huge losses (Zhu, Yang, and Feng). The policy can be an excellent method to deal with a country, which is economically unstable. Such nations will be unable to execute most roles and therefore will agree to practice fair trade. The policy under discussion can be inefficient while dealing with countries like China. For instance, China responded by imposing twenty-five percent tariff on American commodities (Zhu, Yang, and Feng). Therefore, it made the U.S. lose a total of three billion US dollars. Thus, the method is ineffective.

Similarly, the Trump's administration announced that they would take actions against China by applying Section 301, which states that the policies from the Chinese government are harmful to both the state and its stakeholders (Zhu, Yang, and Feng). Since such laws are in WTO guidelines in which all our members, it may temporarily solve the problem, the members of WTO will have to be involved in acting as mediators so that the two nations find a solution to their ranges. The member states may, therefore, make decisions on the case that favor both the countries. Consequently, they may consider both the two countries to draw such tariffs. The policy shall not have provided the best solution to the U.S. problem.

Recently, the U.S. imposed sanctions on Huawei phones. The phone will not use the services of Google, which is a U.S. based company with its headquarters in Europe. The penalty is the most current, attracting more debate on such policies. The Huawei phones will, therefore, have no access to the services of Google such as YouTube. Thus, the phones cannot favorably compete for their substitutes in the market as it lacks an important feature. Their cost reduces since it cannot match other products. The company will record significant losses in its branches across the world. Therefore, fewer revenues will be unable to support most of the company's activities globally. The effect will lead to unemployment, as the company cannot manage the initial pool of employs who supports its operations globally - therefore leading to reduce economic growth in many nations, including the U.S.

Concerning the policies that Trump's government has enacted to deal with trade wars between China and the U.S., the most current one has more significant effects and is, therefore, the best. Denying Huawei Company the services of Google is a big blow to the company and the economy of China at large. The cost of their phones reduces making the company to get lower revenues. Since the company will be unable to support most of its activities globally, it will have to lay off some of its workers. Because the company is based in China, where the company employs many workers to help them facilitate many processes to aid their success, it will lead to the unemployment of a considerable number of individuals in China. Since the government is a stakeholder in the company, it will receive less revenue from the firm as compared with the initial amount. The Chinese government, therefore, records a significant loss created by unemployment as well the fewer earnings from the company. As a result, the government of China must look for a better method of dealing with the situation since such sanctions will continue causing harm to the economy of China. Therefore, this is the best policy to deal with the Chines government so that they may fairly trade.

In summary, the research reports on the trade war between the U.S. and China. For the U.S. to achieve its aim of promoting free and fair trade, the federal-state proposed some measures to take. The suggested techniques include inaction of different policies or discussions. Some of the procedures in the research consist of the promotion of free and fair trade between the two countries. Besides, the Federal state levied high taxes on steel and aluminum in which China is the primary producers. Trump's government threatened that it would take actions on the country using Section 301 of WTO, to enable the nation to promote fair trade. Lastly, the U.S. decided to deny Huawei, Google services. According to the report, this is the best method.

Conclusion

In conclusion, the U.S. government, as well as the Chinese administration, are involved in trade wars as the US government considers China to be trading unfairly. The U.S., therefore, has decided to find solutions to this challenge using different policies. Among the procedures, the recent sanction on Huawei phones has had the most significant effects that may force China to look for a method to resolve this issue. The most likely strategy may comprise China promoting ethical business practices Chinese companies, which is the aim of the U.S.

Works Cited

Baldwin, Richard. "The World Trade Organization and the future of multilateralism." Journal of Economic Perspectives, vol. 30, no. 1, 2016, pp. 95-116., DOI: 10.1257/jep.30.1.95. Accessed 29 June 2019.

McGillivray, Fiona. "Democratizing the WTO." Essays in Public Policy 105 (2000). http://media.hoover.org/sites/default/files/documents/epp_105.pdf. Accessed 10 June 2019

Zhu, Zeyan, Yaotang Yang, and Shuqi Feng. "Trade War between China and the US." 2018 International Conference on Advances in Social Sciences and Sustainable Development (ASSSD 2018). Atlantis Press, 2018.