The U.S.-China economic relationship remains one of the most important economic relationships in which the United States is engaged. As the United States second-largest trading partner, trade and investment with China provides important benefits and opportunities for the United States, its industries, workers and consumers. For the United States, China is both a major market and a major competitor given its 1.33 billion people and over $2.8 trillion in foreign-exchange reserves. With an expected growth rate of 8.7 percent in 2012[i], the China market will continue to be one of the most important growth markets worldwide. U.S. exports to China have grown more than five-fold since 2000, making it Americas fastest-growing export market. At the same time, China, as a major trader and foreign investor, will continue to challenge the United States economically throughout the world.
Since its entrance into the World Trade Organization (WTO) over 10 years ago, China has made significant progress to increase its integration into the international economy, and to adhere to the obligations it made in joining the WTO. China's commitments and ongoing dialogue in bi- and multilateral fora have helped to advance its economic and commercial relationship with the United States.
Nevertheless, the economic and commercial challenges in the U.S.-China relationship continue to grow, including with China's adoption of additional market-access restrictions and its continued failure to protect fully intellectual property rights. These restrictions and policies have had a negative effect on building the U.S.-China trading relationship and have led to a reduction, rather than an increase, in the participation of certain sectors of U.S. and other foreign business in the Chinese market, as China has used these barriers to promote the competitive advantage of its domestic firms.
It is vital, therefore, that the United States fully embrace a comprehensive, coordinated and multifaceted approach to improve the U.S.-China economic relationship specifically and U.S.-Asian relations more broadly, including through:
Employing all of the WTO mechanisms available, including, the WTO Trade Policy Review Mechanism, WTO committee meetings, and the dispute-settlement system to promote China's compliance with WTO rules and its full participation in the global trading system.
Working in a sustained and coordinated fashion through the Strategic and Economic Dialogue (S&ED), the Joint Commission on Commerce and Trade (JCCT), and other bi- and multilateral fora to focus on addressing priority and systemic issues in the U.S.-China economic relationship from intellectual property to market access.
Building a stronger U.S.-China economic relationship through clearer, deeper and more far-reaching commitments where possible, including through a U.S.-China Bilateral Investment Treaty (BIT) and China's accession to the WTO Government Procurement Agreement.
Expanding the U.S. presence and participation in Asia through stronger economic ties, such as through the implementation of the just-passed Korea-U.S. Free Trade Agreement and the negotiation of a comprehensive, high-standard Trans-Pacific Partnership (TPP) agreement.
This approach must be comprehensive and sustained, rather than the one-off type of effort that has too often characterized U.S.-China economic relations and has led to the United States negotiating and renegotiating virtually the same commitments over-and-over again. The United States should also refrain from taking counterproductive actions that will undermine the creation of new economic opportunities for the United States in its relations with China. Each of these issues is discussed below. On the issue of currency undervaluation, for example, ECAT urges for China to ensure its currency valuation aligns with market forces, yet strongly opposes U.S. legislative proposals to remedy countries currency undervaluation through the imposition of penalty tariffs. These proposals would likely violate the United States WTO obligations and could lead to WTO-sanctioned retaliation against U.S. exports. Further, this legislation would, in effect, turn the attention away from China and towards the United States to the detriment of U.S. exports and jobs.
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[i] World Bank, 2010 Data
