In a recent forum commemorating the 45-year diplomatic legacy between the United States and China, economic experts contended that trade relations have shifted from cooperation to competition, and that the governments need a more strategic approach to risk management.
The business relationship has often been described as the ballast of bilateral ties since China and the U.S. established diplomatic relations in 1979, and the win-win philosophy has been a mainstay of that history over the past 45 years.
The U.S. and China have developed a high level of economic interdependence since China's reform and opening-up to the world. China rapidly developed to be a major center of manufacturing and supply chains in the world, becoming the U.S.' third-largest trading partner.
In the forum hosted by The Carter Center in Atlanta, Georgia, last week, Anna Ashton, director of China corporate affairs and U.S.-China at Eurasia Group in New York, said there has been a definite "philosophical shift" in the U.S. from the concept that economic interdependence is good for conflict deterrence, to the idea that economic interdependence increases vulnerability.
Arthur Kroeber, founding partner and head of research at the Hong Kong-based financial research company Gavekal Dragonomics, said the economies of the U.S. and China were largely complementary 15 or even 10 years ago, and that is changing rapidly now.
Chinese companies are now seen as a "direct competitor" to U.S. companies, especially "in the cutting-edge industries", he said.
The business relationship has proved to be a key cornerstone of U.S.-China relations during the early years of China's opening-up, said Ka Zeng, a professor and director of international and global studies at the University of Arkansas.
However, increasing economic interdependence has also generated domestic backlash in the U.S., Zeng said, and the country's politicians have blamed China for "a host of economic problems".
"This has paved the ground for (former U.S.) president (Donald) Trump to launch the great trade war against China," she said. "It is an important political implication in the trade relationship when the (U.S.) threatened to impose sanctions against China for its 'unfair' trade practices."
There have been persistent issues around fairness, market access, third markets and intellectual property protection. The trade conflict between the two sides has continued for more than five years as a new normal, with current U.S. tariffs on more than $300 billion worth of Chinese goods.
Continuing connectivity
On the other hand, data showed that U.S. companies continue to be connected to the Chinese market through China's trade and investment activities with third parties, even though U.S. sourcing is increasingly switching to low-cost manufacturing countries such as Vietnam.
Last year, a business climate survey conducted by the American Chamber of Commerce in China found 73 percent of U.S. companies are not moving their supply chains outside of China, while 23 percent of them are either considering relocating or are already doing so.
"We can see a bit more stickiness that China is the second-largest economy in the world," Zeng said. "It offers huge market opportunities for American companies; it will be harder for American companies to completely shut themselves out of the Chinese market."
Craig Allen, president of the U.S.-China Business Council, suggested a review of U.S.-China economic relations from a historical perspective.
Trade and investment between the two countries have experienced cycles of cooperation and tension. China has a population 4.5 times larger than the U.S.' and has had to cope with a long semicolonial history, Allen said.
"And therefore, the domestic changes and demands in China had enormous impact on the bilateral economic relationship for many years," he said.
Although China's dual circulation policy has a potential impact on U.S.-China trade and investment, he said the policy is really something that "we should applaud", because it aims to expand domestic consumption while promoting self-reliance among China's innovative industries.
In talks with her Chinese counterpart before the Asia-Pacific Economic Cooperation forum in San Francisco in November, U.S. Treasury Secretary Janet Yellen said the U.S. "has no desire to break economic ties with China", and that imports from China benefit U.S. companies and consumers.
"So, the most recent signals are very positive, (except) that we're going to maintain restrictions around tech. Other trade is very, very welcome," Allen said.
"We hope the trade will flourish in both imports and exports between the two countries, as both governments have signaled their willingness to bring more stability to the relationship."
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