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U.S. Economic and Trade Policy Toward China and New Trends in U.S.-China Economic and Trade Relations


Song Guoyou, an expert on U.S.-China economic relations at Fudan University, evaluates Beijing’s response so far to de-risking strategies adopted by the Trump and Biden administrations. Song argues that China can limit both the scope and negative impacts of such measures by seeking to maintain stable relations with Europe and U.S. allies more generally, diversifying export markets, publicly contributing to global economic goods through promotion of the BRI and participation in RCEP, and sustaining U.S. business interest in China.

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The economic and trade relationship between China and the United States is the most important bilateral economic and trade relationship in the world. Since the Biden administration took office, there have been new developments in the United States’ economic and trade policy toward China: economic factors have played a diminished role, while non-economic factors have grown increasingly prominent, and the logic behind the development of China-U.S. economic and trade relations is changing. To better manage relations with the United States, formulate an effective response strategy, ensure national economic security, and establish a new pattern of development, it is crucial to analyze U.S. economic and trade policy toward China, identify the trends in China-U.S. economic and trade relations, and examine the major problems in the relationship.


I. Characteristics of U.S. Economic and Trade Policy toward China


Over the Trump and Biden administrations, the United States has developed an economic and trade policy toward China characterized by four “highs”: high industrial subsidies, high tariffs on China, suppression of China’s development of high technology, and high-quality coordination with allies. Combining the economic strategies of the two administrations and aimed at competition with China, this “four highs” policy is generally supported by U.S. strategists and has become the main thrust of U.S. economic policy toward China today.1


First, high industrial subsidies serve as the cornerstone of this policy. In its economic competition with China, the United States has come to embrace industrial policies, which it once opposed, and has actively implemented a modern industrial strategy. In his 2023 State of the Union address, U.S. president Joseph Biden made it clear that in order to compete with China, the United States must invest more to strengthen itself, with a focus on “American innovation and industries that will define the future that China intends to dominate.”2 The Biden administration, in fact, has pursued industrial policy before. The American Rescue Plan and the Bipartisan Infrastructure Law, both passed in 2021, contain numerous subsidy-based industrial policy components. The CHIPS and Science Act and the Inflation Reduction Act, both passed in 2022, provide significant subsidies to industries that the United States has identified as critical. By providing subsidies totaling $76 billion over five years, the CHIPS and Science Act is designed to encourage semiconductor companies to invest in the United States, expand domestic chip production, and stifle the growth of China’s chip industry. The act also intensifies competition with China by setting up guardrails and trade initiatives, explicitly prohibiting companies subsidized by the U.S. government from expanding or upgrading manufacturing capacity for advanced chips in China for ten years.3 This is a typical targeted industrial subsidy, which openly discriminates against and excludes China to force companies to choose between the two countries. The Inflation Reduction Act plans to provide $369 billion for investment in and subsidies for industries related to clean energy and climate change, including tax credits for U.S. consumers who purchase electric vehicles, thus enhancing the domestic supply chain and manufacturing capacity for batteries and electric vehicles while reducing the import of them from China.4 The act’s impact on China lies in the provisions that, in order to qualify for the tax credits, an electric vehicle must have a final assembly in the United States or in a country with which the United States has signed a free trade agreement, with at least 40 percent of metal materials and minerals used in the battery extracted and processed in the United States or in a country with which the United States has signed a free trade agreement.

一是以高额补贴的产业政策为基础。在对华经济竞争中,美国大力推行其曾反对的产业政策,积极实施现代产业战略。在2023年度国情咨文中,拜登明确表示为了同中国竞争,美国要加大投资使自身更为强大,重点投资于美国的创新,投资于着眼未来的行业,投资于中国意图主导的行业。事实上,此前拜登政府就推行过产业政策。2021年通过的《美国救助计划》(American Rescue Plan)和《两党基础设施法案》(Bipartisan Infrastructure Law)包含了大量公共补贴的产业政策内容。2022年通过的《芯片与科学法案》(CHIPS and Science Act)和《通胀削减法案》(Inflation Reduction Act)更是为美国所认定的关键产业提供了巨额补贴。《芯片与科学法案》通过在五年内提供总额高达760亿美元的补贴,旨在鼓励半导体企业在美国投资,扩大美国国内芯片生产,扼制中国芯片产业升级发展。该法案还通过设置护栏和贸易倡议,强化对华竞争,明确规定接受美国政府补贴的公司10年内禁止在中国扩大或升级先进芯片产能。这属于典型的定向产业补贴,公开歧视和排除中国,迫使相关企业在中国和美国之间作出选择。《通胀削减法案》计划提供3690亿美元用于投资补贴清洁能源与气候变化产业,为购买电动车的美国消费者提供税收抵免,借此提升美国国内电池和电动汽车供应链和制造能力,减少从中国进口电池和电动车。该法案打击中国的要害在于,为了获得税收抵免,消费者所购买的车辆最终组装必须在美国本土或在与美国签署自由贸易协定的国家进行,且电池中至少有40%的金属原料和矿物要在美国或与美国签署自由贸易协定的国家开采、提炼。

Second, the policy takes high tariffs on China as a given. The Biden administration has made the high tariffs set by the Trump administration a precondition for developing economic and trade relations with China and is unwilling to voluntarily give up this tool. Against a backdrop of severe domestic inflation in 2021 and 2022, the Biden administration had several internal discussions on whether to reduce tariffs on Chinese exports to alleviate inflationary pressures, only to decide against changing course in the end. U.S. Trade Representative Katherine Tai, one of the officials advocating the continuation of high tariffs, has emphasized the strategic importance of high tariffs and cautioned against seeing cutting tariffs merely as a means to address inflation,5 a view shared by U.S. National Security Advisor Jake Sullivan. Due to such internal differences of opinion, the Biden administration shelved the idea of easing inflationary pressures by reducing China tariffs and only excluded some Chinese products from punitive tariffs. In keeping the high tariffs, it also intends to take advantage of the U.S.-China “Phase One Economic and Trade Agreement” to continue to exert pressure on China. The United States argues that China has failed to fulfill its commitments under the agreement, which can be leveraged in future economic and trade negotiations to put pressure on China. In addition, the Biden administration’s economic and trade policy toward China has an impact on domestic politics as well. A removal or substantial reduction of the high tariffs on China would trigger an uproar from manufacturing and other interest groups, which would jeopardize Biden’s domestic political agenda.


Third, the policy revolves around suppressing China’s development of high technology. Imposing technology restrictions on China, the United States has made it clear that it will seek to maintain an absolute lead instead of a relative advantage and has taken a series of measures to stifle China’s development of advanced technologies.6 Export controls represent a key plank of the United States’ effort to slow down China’s technological progress. In order to make export controls on China more effective, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce has continued to introduce new policies, expand its control list, and tighten technology restrictions on China. In an August 2022 revision, for example, BIS added to its control list items related to the development of China’s semiconductor industry, including gallium oxide, diamonds, specific electronic computer-aided design software, and pressure gain combustion technology. In an October 2022 revision, BIS moved beyond controls centered on items and directly restricted “U.S. persons” from engaging in activities that support China’s development of integrated circuits and semiconductor manufacturing, with “U.S. persons” broadly defined to include all U.S. citizens, permanent residents, U.S.-based foreign persons, and U.S.-incorporated legal persons. In January 2023, BIS announced that controls already implemented on mainland China and Hong Kong would be extended to Macau. With a succession of new technology controls against China, the United States aims to tighten its grip on China’s development of technologies such as semiconductors and artificial intelligence, thus increasing its technological lead.

三是以对华高科技打压为核心。在对华技术限制领域,美国明确了对华从保持相对竞争优势到保持绝对领先优势的理念转变,采取一系列措施打压中国高科技发展。出口管制是美国限制中国技术进步的核心政策。为提升对华出口管制效果,美国商务部工业与安全局(Bureau of Industry and Security,简称BIS)持续推出新政策,扩大管制名单,收紧对华技术限制。一些新内容包括:(1)增加对中国半导体产业发展的技术管制条目。在2022年8月的修订中,BIS把氧化镓、金刚石、特定的计算机辅助软件以及压力增益燃烧技术列入管制目录。(2)突破原有以物项为对象的管控模式。在2022年10月的修订中,BIS直接限制“美国人”从事支持中国集成电路开发和半导体制造的活动。“美国人”定义宽泛,任何美国公民、持有美国绿卡的外国人、位于美国的外国人以及在美国设立公司的法人都在管控范围。在2023年1月的修订中,BIS宣布对中国澳门实施与中国内地和香港相同的管制政策。美国紧锣密鼓地推出新的对华技术管制措施,意图加大对中国半导体和人工智能等技术的控制,增加对华竞争的技术优势。

Fourth, the policy emphasizes high-quality coordination with allies. Trumpeting the rhetoric of “democracy against authoritarianism,” the United States exaggerates China’s threat to the international economic system and global supply chain, takes pains to highlight the role of values, and pushes ahead with “friendshoring” in a bid to create an economic sphere with allies and sideline China, even at the cost of disrupting the normal global production and trade system. In the Indo-Pacific region, the United States is working at pace on the Indo-Pacific Economic Framework for Prosperity. Since the Biden administration announced the launch of the framework in May 2022, the United States and other member states have held several rounds of online and offline ministerial meetings to negotiate over the four pillars of trade, supply chains, clean economy, and fair economy. On the transatlantic front, the United States continues to promote bilateral coordination through the U.S.-EU Trade and Technology Council, which held two meetings in 2022 to discuss issues such as labor rights, supply chain resilience, emerging technologies, the semiconductor production chain, opposition to “economic coercion,” and China’s “non-market economic policies and practices.” The semiconductor production chain is a focus of Biden’s efforts to build a technology alliance against China. In order to strengthen controls on semiconductor technology exports to China, the United States is actively peddling the idea of a “Chip 4” alliance with South Korea, Japan, and Taiwan, seeking to tighten multilateral semiconductor export controls aimed at China under the Wassenaar Arrangement. It is, furthermore, persistently pressuring the Netherlands and Japan to restrict the export of technology and equipment for manufacturing advanced chips at the expense of their own economic interests.

四是以高质量盟友协调为重点。美国通过所谓“民主对抗威权”的叙事包装,渲染中国对国际经济体系和全球供应链的“威胁”,刻意突出价值观作用,加快推行“友岸外包”(friend-shoring),借此协调盟友打造针对中国的“盟友经济圈”,不惜撕裂全球正常的生产和贸易体系。在印太地区,美国加快构建印太经济框架。在2022年5月拜登政府宣布启动“印太经济框架”(Indo-Pacific Economic Framework for Prosperity)后,美国及其他成员国进行了多轮线上或线下部长级会晤,推进贸易、供应链、清洁经济和公平经济四大支柱谈判。在跨大西洋方向,美国继续借助美欧贸易和技术委员会(Trade and Technology Council,简称TTC)推动双边协调。2022年美欧TTC举行了两次会晤,讨论劳工权利、供应链韧性、新兴技术、半导体产业链、反对“经济胁迫”以及所谓中国“非市场经济政策与实践”等议题。半导体产业链是拜登打造对华技术同盟体系的重点。为强化对华半导体技术控制,美国积极推动与韩国、日本和中国台湾地区组成所谓“芯片四方联盟”(Chip4)的构想,谋求在瓦森纳协定(Wassenaar Arrangement)下不断收紧对华多边半导体出口管制协议。此外,美国还对荷兰和日本不断施加压力,胁迫两国同意牺牲本国经济利益,限制对华出口先进制程芯片制造技术和设备。

II. China’s Response to U.S. Economic and Trade Policy


Having entered a new stage of development, China has stepped up its efforts to establish a new pattern of development with an emphasis on high-quality growth. It hopes to maintain a stable economic and trade relationship with the United States and work together on the basis of equality and respect.7 In the face of the competitive and restrictive economic and trade policy formulated by the United States in accordance with its China strategy, China has taken targeted countermeasures while endeavoring to strike a balance between its own interests and those of the world economy, actively maintaining the stability of global production and supply chains.


First, China has started a push to lower its dependence on the United States to counteract the United States’ unilateral and reckless abuse of power in the bilateral relationship of interdependence. A product of globalization, the economic interdependence between China and the United States could have been a win-win relationship that satisfied the needs of both countries. The United States, however, has leveraged and weaponized interdependence, taking advantage of its market and technological superiority in the U.S.-China economic and trade relationship to interfere with and stifle China’s development. In order to frustrate the United States’ attempt to weaponize the interdependent relationship and put China in an unfavorable position, China has continued to bolster the independence and security of its development and reduce its dependence on the United States. To this end, it has further diversified its export markets, enhanced the resilience and security of its production and supply chains, stepped up efforts at independent innovation in science and technology, and strengthened its overall ability to fend off economic risks. With regard to reducing dependence on the U.S. market, the United States’ share in China’s foreign trade has dropped slightly in recent years. In 2022, it accounted for 16.2 percent of China’s total goods exports, down 1.2 percent from 2020 before Biden became president, and down 2.2 percent from 2016 before Trump took office.8 As for reducing dependence on U.S. science and technology and promoting self-reliance, China’s investment in research and development in 2022 increased by 10.4 percent over the previous year to 3.087 trillion yuan, surpassing the three-trillion mark for the first time. Its R&D investment intensity (R&D expenditure as a percentage of GDP) reached 2.55 percent, a rise of 0.12 percent over the previous year, and the gap with the United States continued to narrow.9


Second, China has stood up to the United States’ economic coercion and imposed countersanctions in response to U.S. economic sanctions on China, which are unilateral acts that lack legality and legitimacy and against which China takes a resolute stand. It has further refined its export controls and took countermeasures against economic sanctions, increasing the strength and deterrent effect of countersanctions on the United States. To implement the Export Control Law, the Ministry of Commerce published the “Regulations on Export Control of Dual-Use Items (Draft for Comments)” in April 2022, which improves the coordination mechanism for export control enforcement. At the end of that year, the Ministry of Commerce released a draft revision of the “Catalog of Technologies Prohibited and Restricted from Export,” which added to the list technologies in which China has a relative advantage, such as photovoltaic silicon wafer manufacturing and laser radar systems.10 In countering the United States’ unilateral sanctions, China has made two major breakthroughs. At the end of 2022, in response to the United States’ illegal sanctions on Chinese officials on the pretext of “human rights abuse in Tibet,” China imposed countersanctions on relevant U.S. individuals, and it was the first time that China had announced countersanctions by means of an order from the Ministry of Foreign Affairs, which—in accordance with articles 4, 5 and 6 of the Law of the People’s Republic of China on Countering Foreign Sanctions—specified the actions to be taken and their effective date, with a countermeasure list set out in an annex.11 In February 2023, moreover, China placed U.S. missile and defense companies Lockheed Martin and Raytheon on the unreliable entity list and imposed fines on them on the basis of the Foreign Trade Law, the National Security Law, and article 2 of the Provisions on the Unreliable Entity List.12 By taking specific measures in accordance with relevant laws, China has made its countersanctions on the United States more standardized and normalized, with higher practicability and deterrent effect.


Third, China is breaking through the economic and trade encirclement organized by the United States with its allies, actively forging economic and trade cooperation with friendly countries, and maintaining the stability of the structure of international economic cooperation. China persists in the correct direction of economic globalization, promotes bilateral, regional, and multilateral cooperation, facilitates the coordination of international macroeconomic policy, and jointly fosters an international environment conducive to development.13 First of all, it has maintained the overall stability of bilateral relations with the European Union and brought China-EU economic and trade cooperation to a new level. In 2022, the 27 EU countries’ trade with China totaled €856.3 billion, up 22.8 percent year-on-year; China is the European Union’s second largest trading partner, largest source of imports, and third largest export market, accounting for 15.4 percent, 20.8 percent, and 9.0 percent of the European Union’s trade, imports, and exports respectively.14 The same year, China’s exports to the European Union grew by 8.6 percent year-on-year, much higher than the 1.2 percent increase in exports to the United States.15 China also backs the European Union’s opposition to the U.S. Inflation Reduction Act, denouncing it as a typical protectionist practice that might have violated WTO principles such as nondiscrimination. Second, China has actively participated in and spearheaded regional economic integration in Asia and the Pacific, providing more public goods, further promoting the Belt and Road Initiative, and enhancing economic and trade cooperation with a wide range of countries in the region, including allies of the United States. The Regional Comprehensive Economic Partnership, which officially took effect in January 2022, has further reinforced China’s institutionalized economic and trade ties with other member states in the region, and China continues to pursue membership of the Comprehensive and Progressive Trans-Pacific Partnership and the Digital Economy Partnership Agreement. Finally, China is furthering high-level opening up. Taking advantage of its own enormous market, it continues to expand market access, lower the threshold for foreign investors, shorten the negative list for foreign investment, comprehensively improve the business environment, and provide targeted services to foreign-funded enterprises.16 China has sought to encourage the strategic autonomy and initiative of U.S. allies with its pursuit of multilateralism, potential for economic growth, and the vision of the Global Development Initiative. With China’s positive actions, many U.S. allies have come to emphasize cooperation and oppose the Biden administration’s reckless economic encirclement of and confrontation with China, which undermines the global value and supply chains, and they have become an important balancing force in the U.S.-China economic and trade relationship.


III. New Trends in the China-U.S. Economic and Trade Relationship


Market forces still play an important role as the driving force in the current economic and trade relationship between China and the United States. Due to the United States’ restrictive economic and trade policy aimed at strategic competition with China, however, interfering factors such as national security have increased significantly, and the China-U.S. economic and trade relationship is losing momentum for sustained and stable development, with some indicators showing a downward trend.


On the bilateral trade front, according to China’s General Administration of Customs, the total value of trade in goods between China and the United States in 2022 reached $759.4 billion, of which China’s exports accounted for $581.8 billion and imports $177.6 billion.17 According to U.S. statistics, the total value of trade in goods between the two countries was $690.6 billion, with U.S. exports totaling $153.8 billion and imports $536.8 billion.18 Both Chinese and U.S. data show that trade in goods between the two countries hit a record high, but in terms of shares of either country’s total trade, imports, and exports, China and the United States actually became less important in each other’s foreign trade. China’s statistics show that, in 2022, the United States accounted for 12.0 percent of China’s total trade in goods, 16.2 percent of its total exports, and 6.5 percent of total imports—all lower than the previous year’s percentages. U.S. data show similar changes, with China accounting for 12.9 percent, 7.4 percent, and 16.4 percent of the United States’ total trade in goods, exports, and imports respectively in 2022—all lower than in the previous year as well. Thus, although the value of bilateral trade between the United States and China is still climbing, its share of each country’s total foreign trade has begun to slowly trend downwards.


On the financial front, China’s holdings of U.S. government debt have fallen sharply, from $1,040.3 billion at the end of 2021 to $867.1 billion at the end of 2022, a drop of $173.2 billion.19 From a historical perspective, three points stand out regarding this change. First, the decrease in 2022 is one of the largest since China joined the World Trade Organization, second only to the fall in 2016. Second, it was the first time that China’s U.S. debt holdings had dropped below $1 trillion since 2010, plummeting, furthermore, below the $900 billion mark to between $800 and $900 billion. Third, in 2022, China accounted for 11.9 percent of foreign holdings of U.S. debt, the lowest since 2004. It should be noted that the significant reduction in China’s holdings of U.S. debt was not caused by a reduction in China’s foreign exchange reserves, which in 2022 remained stable at around $3.2 trillion.


The number of Chinese companies listing in the United States to raise funds has slumped. In 2022, a total of 12 Chinese enterprises floated in the United States and raised $403 million, dropping by 71 percent and 97 percent respectively from the previous year. An important reason for the sharp decline is the U.S. Securities and Exchange Commission’s enforcement of the Holding Foreign Companies Accountable Act (HFCAA) passed by Congress and its implementing rules, which require foreign companies listed in the United States to comply with the auditing standards of the U.S. Public Company Accounting Oversight Board (PCAOB) or face delisting. Although the risk of delisting ebbed after China’s Ministry of Finance and the China Securities Regulatory Commission negotiated an audit oversight cooperation agreement in August 2022 with the PCAOB,20 which thus gained full access to inspect and investigate U.S.-listed Chinese companies, the HFCAA has still introduced considerable variables and uncertainties for Chinese companies and dampened their enthusiasm for going public in the United States. The U.S. capital market has become significantly less attractive to Chinese companies, and Chinese state-owned enterprises have all exited the U.S. stock market.

中国企业赴美上市融资急剧减少。据统计,2022全年共有12家中企赴美上市,募集资金4.03亿美元,同比分别下降71%和97%。导致中企赴美融资急剧下降的重要原因是美国证监会执行国会通过的《外国企业问责法》及其实施细则,要求在美国上市的外国企业遵守美国公众公司会计监督委员会(Public Company Accounting Oversight Board,简称PCAOB)的审计标准,否则将予以强迫退市。虽然2022年8月中国财政部、证监会与PCAOB经过磋商达成了审计监管合作协议,后者因此获得了检查和调查中国在美上市企业的全部权限,进而消除了中国企业的退市风险,但《外国企业问责法》仍给在美上市中企带来巨大变数,产生重大不确定性,大大降低了中国企业在美上市的热情。美国资本市场对中国企业的吸引力大幅下降,中国国有企业已全部退出美国股市。

Bilateral direct investment between the United States and China has been severely constrained, with two-way flows slowly declining and hovering at a low level in recent years, and the stock of investment has not seen significant growth either. Although China utilized more U.S. foreign investment in 2022 than in the previous year, the United States’ share of the total foreign investment utilized fell to 1.6 percent from 1.9 percent in 2017. At the same time, the United States has made its investment policies toward China more stringent and continued to tighten its review of foreign investment in the United States. In September 2022, Biden issued an executive order that expanded on the existing list of factors that the Committee on Foreign Investment in the United States (CFIUS) considers when reviewing transactions for national security risks, explicitly directing the CFIUS to consider the additional national security factors that it defines in evaluating transactions—a first since the committee’s establishment in 1975.21 The fact sheet that the White House published about the executive order specifically mentioned risks posed by foreign investors from “competitor or adversarial nations” and identified sectors that will be subject to increased scrutiny in the future, including semiconductors, artificial intelligence, biotechnology, quantum computing, and advanced clean energy; China was clearly the intended target here.22 Moreover, the United States plans to further limit direct investment from U.S. businesses in Chinese technology companies. Building on a previous executive order that prohibits investment in entities associated with China’s defense or surveillance technology sector, the Biden administration seeks to screen U.S. investments in China and other “rival countries” to prevent U.S. capital and technology from supporting China’s development. U.S. investments in Chinese high-tech firms may come under particular scrutiny.

中美双边直接投资严重受限,双向流量缓慢下降,近几年持续低位徘徊,存量投资也大致维持之前水平,未有显著增长。虽然2022年中国利用美国外资的规模出现同比增长,但份额下降到1.6%,而2017年的份额是1.9%。与此同时,美国对华投资政策更加严厉。一方面,美国继续收紧外国对美投资审查。2022年9月,拜登发布总统行政令,扩展了外国投资审查委员会(Committee on Foreign Investment in the United States,简称CFIUS)在审查国家安全风险交易时考虑的现有因素清单,并明确要求CFIUS评估其审查的交易时必须对新增国家安全因素做出界定,这是CFIUS自1975年成立以来的首次。白宫发布的关于该行政令的事实清单专门提到来自“竞争对手或敌对国家”的外国投资者带来的风险,并列举了未来将加强审查的领域,包括半导体、人工智能、生物技术、量子计算和先进清洁能源等技术领域,针对中国意图明显。另一方面,美国还计划进一步限制本国公司对中国科技企业直接投资。在之前禁止投资与“中国国防或监控技术部门”有关联实体的行政令基础上,拜登政府还试图进一步限制美国企业对华投资,要求对美国在中国等“竞争对手国家”的投资进行审查,以避免所谓美国资本和技术“资助”中国发展。美国对中国高科技企业投资,或将是重点审查对象。

Bilateral economic and trade communication between China and the United States has yet to return to a normal level, and macroeconomic policies of the two countries have tended to diverge. Important consultation mechanisms, such as the Joint Commission on Commerce and Trade, have been discontinued since Trump took office and have remained so under the Biden administration. Other forms of exchange between U.S. and Chinese economic and trade officials had also declined sharply before the Bali meeting between the U.S. and Chinese heads of state in late 2022 paved the way for a flurry of face-to-face meetings on various occasions between senior Chinese officials—such as the vice premier, the governor of the People’s Bank of China, and the minister of commerce—and their U.S. counterparts. At the beginning of 2023, however, communication between economic and trade officials of the two countries once again faltered due to the repercussions of the “unmanned airship incident.” There are, moreover, marked differences between the two countries in macroeconomic policy. In monetary policy, for example, China lowered interest rates several times in 2022, while the United States repeatedly raised interest rates significantly, their policies increasingly at odds with each other.


IV. Major Problems in the Current China-U.S. Economic and Trade Relationship


In an increasingly complicated international context, the interaction of existing factors and contingencies, along with a combination of economic and non-economic factors, has given rise to a number of major problems that shape the China-U.S. economic and trade relationship and even the world economy.


First of all, the high tariffs imposed on China by the United States persist. Imposed by the Trump administration on the basis of Section 301 of the U.S. Trade Act of 1974, the high tariffs have been in place for more than five years with no clear sign of an end to them, profoundly affecting China-U.S. relations and causing broader ramifications. First, over five years of high tariffs have not markedly reduced the U.S. trade deficit with China—the United States’ stated intended outcome. On the contrary, according to U.S. data, the goods trade deficit widened from $374.3 billion in 2017, the year before the high tariffs were levied, to $382.9 billion in 2022. The deficit would be even wider if additional Chinese imports from the United States under the “Phase One” economic and trade agreement were excluded. Nor have the high tariffs led to a significant return of manufacturing to the United States, where its share of GDP remained below 11 percent in 2022, compared to over 11 percent in 2018. China has not seen a significant outflow of manufacturing either, whose share of GDP rose from 37.8 percent in 2020 to 39.9 percent in 2022.23 Second, the continued high tariffs have resulted in a lose-lose situation, with U.S. consumers paying a hefty price and Chinese exports facing additional costs. As of January 2023, the United States had assessed over $168.8 billion worth of duties on Chinese goods, including about $77 billion under Trump and $83 billion since the start of the Biden administration,24 and it was largely U.S. consumers and Chinese producers that bore the cost. Third, other economies have suffered from high U.S. tariffs on China. For example, as the center of the global production chain, East Asia has been hit particularly hard by the high tariffs and economic confrontation between China and the United States, which threaten a fragmentation of production and value chains. Lastly, the global economy has been dealt a blow. The liberalization benefits resulting from the division of labor between China the United States have drastically diminished, and the risk of decoupling caused by high tariffs looms large. According to the International Monetary Fund (IMF), were China and the United States to split into opposing blocs, the world economy would shrink by 1.5 percent—a loss of more than $1.4 trillion.25 If left in place over the long term, such sweeping, exorbitant, and unusual tariffs will be a major variable in the U.S.-China economic and trade relationship and a negative factor in the development of the global economy.


Second, in the wake of the Ukraine crisis—the largest geopolitical event since the end of the Cold War—the United States has pursued extreme economic and trade policies that have profoundly shaped the possible future trajectories of the China-U.S. economic and trade relationship, which already faced short-term disruptions caused by the crisis. To a great extent, the large-scale, wide-ranging, and excessive economic actions taken by the United States may serve as a rehearsal for how its economic and trade relationship with China might unfold in an extreme scenario. Since the outbreak of the Ukraine crisis, the United States has turned an increasingly broader range of matters into national security issues, weaponized economic factors, treated international public goods such as the international settlement system as its private tools, and brought bloc confrontation into economic relations, striving to drain Russia’s economic strength and restrict its international economic activities through a variety of extreme economic measures. U.S. sanctions have brought about serious repercussions on international trade, finance, energy, and technological cooperation, adversely affecting China-U.S. economic and trade relations. China has expressed grave concern over the United States’ weaponization of economic relations, which severely disrupts the international economic and trade order and jeopardizes the economic development of China and the world. In fact, the high global energy and food prices in 2022 were closely related to U.S. sanctions against Russia. Threatening to exercise “long-arm jurisdiction” against China, meanwhile, the United States has demanded that it comply with the terms of the sanctions on issues such as trade, finance, and energy and not provide material support to Russia or help it systematically circumvent the sanctions.26 This act of economic hegemony has undermined China’s economic sovereignty and interfered with its economic and trade relations with other countries. More importantly, in the Ukraine crisis, the United States went much further than before and crossed previous red lines in its use of various economic instruments, which has whetted its appetite for economic risk-taking. It has, moreover, made much of an analogy between the crisis in Ukraine and cross-Strait relations; as a result, China is now well aware of the possibility and severity of U.S. economic sanctions and is stepping up preventive measures to ensure its economic sovereignty and security. This has served to incline the two countries toward—and accelerate the process of—economic and trade decoupling.


The next problem relates to the United States’ decoupling from China and its actual impact. Redoubling its efforts to decouple from China in high technology and production chains, the United States attempts to thus derail China’s technological and economic development so as to ensure its own economic superiority and security. Its several years of efforts at decoupling has indeed posed a challenge to China, but has failed to make any material impact on China’s technological and economic development. In high technology fields, the United States continues to expand its toolbox of export controls on China, placing more Chinese companies and organizations on various lists. U.S. suppression has put an obstacle in the way of China’s scientific and technological progress, which has been slow in, for example, advanced semiconductor equipment such as photolithography machines. At the same time, however, China has made strides in some strategic emerging industries such as new energy, satellite navigation, and quantum information, and it has achieved major breakthroughs in key and core technologies such as manned spaceflight, lunar and Mars exploration, deep-sea and deep-earth exploration, and nuclear power. Currently, the United States faces a strategic dilemma over decoupling from China. On one hand, existing decoupling measures have failed to produce substantial results. In February 2023, the U.S. Department of Justice and the Department of Commerce launched the Disruptive Technology Strike Force to step up investigation and prosecution of criminal violations of export laws and enhance administrative enforcement of export controls. The establishment of the new strike force no doubt indicates a more stringent approach to decoupling of U.S. exports from China, but it also implies that previous export controls against China did not work as expected, which necessitated stricter measures. On the other hand, the further the United States goes in decoupling from China, the less important it will become for China’s future economic and technological development, and the more independent and autonomous China’s development will be. Even if the United States further toughens export controls on China, the marginal utility of the new measures will remain limited. In the realm of production chains, even though the United States has managed to friendshore or nearshore the production of some goods to replace Chinese exports, China accounts for a higher proportion of global trade and has greater influence in global production chains, its importance rising year by year. China’s goods exports, for example, accounted for 12.8 percent, 12.8 percent, 13.2 percent, 14.7 percent and 15.1 percent of global exports in each respective year from 2017 to 2021.27 Despite a declining proportion of exports to the United States, China’s share of global exports is steadily increasing, demonstrating the competitiveness and resilience of its overall production chains, which have withstood the United States’ decoupling of production chains from China and forged closer links with economies other than the United States. China is now the top trading partner of more than 140 countries around the world, while the United States, in contrast, has seen a decline in its share of global trade.

第三,美国对华“脱钩断链”的实际影响问题。美国不断加大高科技和产业链领域的对华脱钩力度,试图以“脱钩断链”打击中国技术和经济发展,确保自身经济优势和经济安全。美国对华脱钩历经数年,对中国确实构成一定挑战,但对中国科技和经济发展未能产生重大的实质性影响。在高科技方面,美国不断扩张其对华出口控制工具箱,把更多中国企业和机构列入各种清单。在美国打压下,中国科技进步困难增多,如光刻机等先进半导体设备进展缓慢。但与此同时,中国在新能源、卫星导航、量子信息等部分战略性新兴产业取得长足进步,载人航天、探月探火、深海深地探测、核电技术等关键核心技术取得重大突破。当前,美国在对华脱钩问题上面临战略上的两难选择。一方面,已有的脱钩措施未能取得实质效果。2023年2月,美国司法部和商务部宣布牵头设立“颠覆性技术打击小组”(Disruptive Technology Strike Force),加大调查和起诉违反出口法的犯罪行为,加强出口管制行政执法。新机构的设立固然说明美国对华出口脱钩更为严厉,但也说明此前对华出口控制未取得预期效果,只能诉诸更为严格的措施。另一方面,美国越是推进对华脱钩,其未来对中国经济和科技发展的重要性就越低,中国发展的独立性和自主性就会越强。即使美国进一步增加对华出口管制力度,新措施的边际效用仍将有限。在产业链方面,尽管美国在部分产品上的“友岸外包”和“近岸外包”(nearshoring)对中国输美产品有所替代,但从中国与世界产业链的关系看,中国占全球贸易比重更高,影响力更大,在全球产业链中的地位逐年上升。以出口为例,2017—2021年,中国货物出口占全球出口比重分别为12.8%、12.8%、13.2%、14.7%和15.1%。在对美出口比例下降的情况下,中国占全球出口比重稳步提升,表明中国整体产业链具有强大竞争力和韧性,经受住了美国对华产业链脱钩,并与美国之外的其他经济体形成更为紧密的联系。中国目前已是全球140余个国家的首要贸易伙伴,而反观美国,其在全球贸易中的比重反而有所下降。

The last problem concerns the United States’ faltering economic and trade cooperation with China and how to boost it. As anxiety over strategic competition with China grows, some of the U.S. elite have begun to look at U.S.-China economic and trade cooperation in terms of relative benefits, believing that less or no cooperation with China would be more beneficial to U.S. interests. Increasing reconsideration of and opposition to globalization in the United States, moreover, has also resulted in stronger resistance to economic cooperation with China, 28 which has lost some momentum as apathy grows. However, although China hawks in the United States try to use security and political factors to disrupt and hinder U.S.-China economic and trade cooperation, economic and trade relations between the two countries will nevertheless continue to develop—for good economic reasons. Firstly, China’s sustained and rapid economic growth means its market remains lucrative and attractive to U.S. businesses. China’s economy has been growing at a faster pace than that of the United States every year since the reform and opening up began. Even in 2022, a challenging year with a variety of unexpected factors, China’s GDP still rose by 3 percent, higher than the United States’ growth of 2.1 percent. According to IMF forecasts, China’s GDP growth will reach 5.2 percent in 2023, far higher than the United States’ 1.4 percent.29 As China continues to launch market-oriented reform measures and improve its business environment, its huge market is becoming more, not less, attractive. U.S. companies will suffer tremendous losses if they are unable to carry out normal economic and trade activities with China, and the U.S. business community has both the will and the means to counterbalance the interference of non-economic factors in the U.S.-China economic and trade relationship. Secondly, in order to cope with the challenging realities plaguing the U.S. economy, it is necessary for the U.S. government to maintain a relatively stable economic and trade relationship between the United States and China. Today, and for some time to come, U.S. economic growth faces significant headwinds. Inflation is running at a high level, the federal debt continues to climb to record highs, with the debt ceiling problem cropping up from time to time, and the possibility of a recession cannot be ruled out. In such economic circumstances, the U.S. government needs to maintain necessary cooperation with China and prevent U.S.-China economic and trade relations from veering out of control or breaking down, which would precipitate the U.S. economy falling into a serious crisis. Additionally, trade with China makes an important contribution to job creation. According to the U.S.-China Business Council, the number of jobs supported by exports to China exceeded one million in 2021 for the first time.30 Finally, the global economic network, as an objective structural force, compels the United States to maintain economic and trade cooperation with China, which has organically integrated into the global economic system. The United States, being part of that same system, would find it difficult in the short term to break away from the institutional network formed by the interweaving of various international economic rules or from the trade network that has developed as a result of the collaboration and division of labor among market players. Embedded in the global economic and trade network, most U.S. allies have little desire to stick with the United States in adopting a systemic strategy to compete with China.

第四,美国对华经贸合作的动力衰减及其维系问题。随着对华战略竞争焦虑感增加,部分美国精英开始从相对收益角度考虑中美经贸合作,认为对华少合作或者不合作更有利于美国利益。此外,由于美国国内对全球化的反思和反对在增加,对华经济合作的国内阻力也在加大。美国对华经贸合作的冷感增强,经贸合作动力有所衰减。然而,虽然美国对华鹰派试图用安全和政治因素干扰和抑制中美经贸合作,但两国经贸关系发展并不会因此立即陷入停滞,目前仍有其强大的经济逻辑。一是中国经济持续快速增长,能够为美国商界继续提供极具吸引力的市场利益。改革开放以来,中国历年经济增速都要高于美国。即便是遭受各种超预期因素挑战的2022年,中国GDP增速为3%,仍高于美国的2.1%。根据IMF预测,2023年中国GDP增速将达到5.2%,远高于美国的1.4%。随着中国不断推出市场导向的改革举措,优化营商环境,中国超大规模市场的吸引力在增强而非在削弱。美国企业如不能正常对华开展经贸合作,将遭受巨大利益损失,美国企业界有意愿也有途径平衡非经济因素对中美经贸关系的干扰。二是为应对本国经济的现实挑战,美国政府有必要保持中美经贸关系的相对稳定。当前及未来一段时间,美国经济增长面临较大挑战,通货膨胀高位运行,联邦债务规模不断突破历史新高,债务上限问题不定期爆发,衰退可能性不能排除。在这样的国内经济状况下,美国政府需要和中国保持必要合作,防止中美经贸关系失控破裂使美国经济出现严重危机。此外,对美国政府而言,对华贸易还有重要就业创造效应。根据美中贸易全国委员会(US-China Business Council)的数据,对华出口带来的工作岗位规模在2021年首次超过了100万。三是全球经济网络作为一种客观的结构性存在对美国形成制约,要求其与中国保持经贸合作。中国已融入全球经济体系,和该体系形成有机联结。美国作为全球经济网络的一部分,短期内既难以打破各种国际经济规则交融形成的制度网络,也难以突破市场主体分工协作形成的交易网络。身处全球经贸网络当中,美国大部分盟友更不愿意坚决跟随美国对华采取系统性的竞争策略。

V. Concluding Remarks


U.S. economic and trade policy toward China has entered a new era, and there have been major changes in its rationale, with economic and trade factors themselves playing a diminished role and other factors such as national security considerations and geopolitical events coming to the fore. The China-U.S. economic and trade relationship is at a crossroads, and the diverging paths will lead to different futures: the two countries can choose to solve problems in cooperation, move forward in healthy competition, and rely on multilateral and global mechanisms; or they can engage in confrontation and create problems, sink each other in vicious competition, and turn to isolationist nationalism. China chooses the former, but the outcome does not depend solely on China. If the United States remains obsessed with hegemony and zero-sum thinking, convinced that China is the source of its problems, and determined to proceed with decoupling from China, the cost and damage to the world economy and the United States itself will be extremely high. China must seize the initiative in economic and trade relations with the United States and increase its influence on the relationship, instead of letting the United States dictate the course of its development. Planning for the worst-case scenario, China cannot rule out—and must seriously prepare for—the possibility of the United States resorting to an extreme economic and trade policy. This means China has to always focus on high-quality domestic growth, rely on the certainty of its own economic development to deal with the uncertainty of U.S. economic and trade policy toward China, and restore the role of economic factors in U.S. policymaking. This is not only fundamental to stabilizing the China-U.S. economic and trade relationship, but also key to winning the economic and trade competition with the United States.


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Cite This Page

宋国友 (Song Guoyou). "U.S. Economic and Trade Policy Toward China and New Trends in U.S.-China Economic and Trade Relations [美国对华经贸政策与中美经贸关系新趋势]". CSIS Interpret: China, original work published in China International Studies [国际问题研究], March 15, 2023

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