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[Trade with China is politically sensitive in the United States these days. The U.S.’s bilateral trade deficit U.S. with the People’s Republic is perceived to be the consequence of unfair trading by the Chinese and leads, therefore, to calls for protection and aggressive export policies. The resulting policies are remarkably reminiscent of the U.S.’s reactions and sensitivities to Japan’s economic rise in the 1970s, 1980s, and 1990s. Indeed, some of the U.S. responses have a kind of déjà vue, such as bilateral arrangements to secure a guaranteed amount of sales in China, pressures with respect to currency undervaluation, or the intensified use of trade remedies. Rising import competition for an expanding scope of products and the resulting political economic pressures inside the U.S. explain for these. There is however, an important difference with the Japanese parallel. China is indeed, increasingly perceived by the U.S. as a hegemonic competitor that aims at dismantling U.S. global leadership over time. With China, it is not just about U.S. businesses and jobs, but about the U.S.’s leadership position. Different from Japan, what is at stake is not merely politically economic, but existential in nature.]
Published: Feb 5, 2022
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