U.S.-China trade ties 'essential' for both nations

Two leading economies inextricably linked despite challenges, officials say

The United States and China have taken several steps this year to showcase the importance of their crucial two-way trade relationship despite some fractures, as economic stability is "important" for both countries, say officials.

U.S. Secretary of Commerce Gina Raimondo said on a four-day visit to Beijing in August: "It is profoundly important that we have a stable economic relationship. It's to the benefit of both our countries and, in fact, what the world expects of us."

The world's two largest economies represent 40 percent of global output. And China's GDP of $18 trillion in 2022 was inching closer to that of the U.S., which was $22.5 trillion last year. Economists at Goldman Sachs predict that China's GDP could surpass the U.S. by 2035.

Analysis by the International Monetary Fund found that if China's population of 1.4 billion and local prices are taken into consideration, based on purchasing power parity, its share of world GDP is 18.9 percent, which is ahead of U.S. GDP of 15.4 percent, The New York Times reported.

China is the world's largest producer of car batteries, plastics, steel, electronics and coal. It is also the largest exporter of automobiles and a leader in electric cars.

In comparison, the U.S. is the world's second-largest goods exporter. Its top exports include gasoline, liquefied natural gas, crude petroleum, transportation equipment, computers and aerospace products.

Beijing is Washington's third-largest trading partner.

The U.S. and China are inextricably linked on trade, as the U.S.' supply chain is heavily reliant on Chinese production, say researchers.

Economists Laura Alfaro from Harvard Business School and Davin Chor from the Tuck School of Business at Dartmouth looked at trade between the U.S. and its key trading partners along with world events since 2017.

They found that U.S. imports from China expanded from approximately $505.1 billion in 2017 to $531.3 billion in 2022, an annual nominal growth rate of 1.2 percent.

"It came despite the sharp ups and downs in trade volumes in the intervening pandemic years."

In 2022, the U.S. imported " $563.6 billion worth of goods from China — up 6.3 percent or $32 billion from 2021, and up 26 percent from 2012", according to the Office of the U.S. Trade Representative.

U.S. exports to China were 7.5 percent of its overall exports in 2022, and the U.S.' goods trade deficit with China was $382.3 billion in 2022, an 8.3 percent increase or $29.4 billion over 2021, the office said.

Additionally, the U.S.-China Business Council said that in 2021, U.S. exports to China supported nearly 1.1 million jobs in the U.S..

The two countries have faced a series of challenges this year that have threatened to set their ties back.

In August, U.S. President Joe Biden signed an executive order that blocks and monitors U.S.-based investments to China, which stoked "serious concern" from China's Ministry of Commerce.

More than 720 Chinese companies are restricted from purchasing from the U.S..

China is still subject to trade tariffs put in place by former U.S. president Donald Trump.

High-level talks

In an attempt to smooth relations further, the Biden administration has sent several high-level officials to Beijing for talks.

Treasury Secretary Janet Yellen, Secretary of State Antony Blinken and climate envoy John Kerry have all visited Beijing this year.

In August, Raimondo met with business leaders in Beijing and Shanghai after an invite by Chinese Minister of Commerce Wang Wentao.

She said her visit was aimed at fostering "constructive discussions on issues relating to the U.S.-China commercial relationship".

Wang added that Beijing was "ready to work together to foster a more favorable policy environment".

Last month, the two countries created two working groups to address economic and financial issues. They will be led by Yellen and Chinese Vice-Premier He Lifeng.

The groups were formed a week after U.S. National Security adviser Jake Sullivan held a two-day meeting in mid-September with Chinese Foreign Minister Wang Yi.

The White House described the talks as "part of ongoing efforts to maintain open lines of communication and responsibly manage the relationship".