The US and China have a long and varied history of trade relations. As the economic world enters a new era, and as China emerges as a new economic superpower, the trade relations between US and China will be of importance to all. The majority of interactions between both these countries can be followed back to a need to trade, and that is the reason why understanding their trade relations are essential. In this paper I will seek to provide the reader a much better understanding of trade from the perspective of an American citizen. The main goal of this paper is to answer the question, “what should US trade policy be towards China?” with as little bias as possible. Although my main focus will be from the perspective of an American citizen, there will naturally be a need to address some issues that deal with the wellbeing of Chinese citizens, namely human rights. The world today has become so integrated that when looking at the concept of trade relations, we must look beyond only one perspective. Firstly I will look at a brief history of US-China trade relations and how this can and has affected the current trading patterns between the nations. Following a brief history, I will contextualize trade relations and policy into seven major categories which will be: 1.
Lastly, I will look at trade policy from the three main economic ideological perspectives (left, center and right) and how each of them would fulfill their ideologies through trade policy. I will provide a brief explanation of each ideological perspective before proceeding to explain their views on trade policy and how they would seek to solve the problems they perceive.
History of US-China Trade
Trade history between US and China go back more than two hundred years. In the last two hundred years there have been many changes within each country which has affected the way they trade with each other and the world. Advances in technology has obviously been a major factor in advancing trade between these two nations as their trade relationship begins to grow stronger everyday. In 1784 the US ship, “Empress of China,” was the first American trading ship to arrive on Chinese shores. On the ship for trading were American cloth, pepper and ginseng for Chinese tea, silk and spices and furs. Up until the 1840’s trading of these types of simple items were the most popular for the rich Chinese consumers that could afford any sort of imported good. Americans have always had a desire for foreign and exotic goods and with the East India Company (the British conglomerates) no longer dominating American trade, the position of fulfilling this market fell to the American merchants. When the Empress of China arrived back in the US, it brought a large stock of never seen before Chinese goods which were sold for a profit of $30,000 – a significant 25% profit. Other US merchants didn’t take long to realize that, while selling local US goods to the Chinese was profitable, selling Chinese goods in America was even more so. This idea of profitability was also supplemented by the fact that China, in general, had a mercantilist attitude about foreign commerce, meaning that they tended to oppose too much the importation of foreign goods. Both these reasons created a different mindset for American traders who began to focus their available funds on acquiring Chinese products to sell in the US rather than on US products to sell in China. As a result, the US was flooded with Chinese teas, cottons, silks, etc to the extent that even people of poor social class owned some Chinese items. From 1840 to 1842 the Opium War broke out and much of the US-China trade ceased. The opium war began because China refused to accept any imports of US and British opium. Subsequently, the UK seized Hong Kong (a minor post at that time) as China lost the war. The Nanjing Treaty, signed between the UK and China,...
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