Economics of the 2016-2017 Debate Topic: U.S. Relations with China, Mixing Cooperation with Competition

Special Publications | Economy


Wednesday, December 28, 2016
by Doug Bandow

“Resolved: The United States federal government should substantially increase its economic and/or diplomatic engagement with the People’s Republic of China.”

There is no more important bilateral relationship than that between the United States and China. Yet the Congressional Research Service warns that ties have “become increasingly complex and often fraught with tension.” Relations appear likely to become even more fractious with the election of Donald Trump as president. Every four years the People’s Republic of China (PRC) becomes a presidential election issue, but Americans deserve a better explanation of the importance of U.S.-China political and economic relations than candidates’ sound-bytes.

The Complicated Relationship with China. China is an emerging great power and perhaps eventual superpower that is challenging Washington in several key areas. The economic benefits for the United States of its relationship with China seem obvious, but many Americans wonder if the difficulties outweigh the benefits.

The PRC possesses the world’s second largest economy and has become both commercial partner and competitor with the United States. Trade between the two nations is beneficial because of comparative advantage; that is, each country is relatively better at producing some items than the other. This economic concept is the foundation for trade throughout history.

However, international commerce today is about politics as well as economics. Trade and investment disputes have multiplied between the two governments while China remains the fount of extensive cyber-espionage targeting U.S. business secrets. Continuing the relationship depends on the ability of the two governments to work through these often contentious disputes.

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