The US – China trade relationship was witnessing a gradual downfall, due to a number of reasons like the COVID – Pandemic, trade war, Taiwan issue. The relationship hit rock-bottom after the Chinese Spy baloon in the US. The relationship bounced back to healthier levels after the
1. New Trade Agreements Signal Improved Relations
New Trade Agreements Signal Improved Relations Between US and China, signed by President Xi Jinping of China and President Joe Biden of US, last November in San Francisco has strengthened the bilateral relationship between the two countries. The November summit, topics around trade, environment and military were discussed.
2. Key Industries Benefiting from Enhanced US-China Trade Relations
> Technology and Electronics
Out of the total exports from China to us the electronics segment is the highest exporter. The resumption of positive relationship would enhance this sector by gaining acces to the US market, strategic Joint Ventures with US firms and collaborations.
> Automotive Industry
The US could market it’s advanced Self Driving tecnology in China and China could sell it’s lower cost EVs in the US. China has been drastically building a robust EV and allied sector like batteries and panels to export globally at scale.
> Consumer Goods
The consumer goods industry ranging from household goods like fashion, appliances, toys, etc has begun to see increase in exports post the grave relations immediately post the pandemic.
> Pharmaceuticals and Healthcare
Mutual cooperation between the two countries would result in mutually cooperated regulatory process and efficient approval processes. This would lead to joint research and development in this sector.
> Financial Services
US and now China, both have enormous capital to be invested. Mutual relationship between the countries would encourage investors to distribute capital and other financial products.
> Energy Sector
Energy products such as Liquified Natural Gas(LNG) and crude oil could be exported to China while the later could export renewable energy appliances and machinery to the US.
3.Challenges and Future Prospects in the Evolving Trade Relationship
The road to harmonious and strategic bilateral relationship between the two countries is based on how challenges are faced and how future prospects benefit both the countries
> Supply Chain Dependency – The US has had a longstanding trade deficit with China, and the pandemic highlighted America’s heavy reliance on Chinese goods. In response, the US is considering diversifying its supplier base to reduce dependence on China. Additionally, the US is concerned about China’s rapid economic growth.
> Rising Economic Nationalism – With increasing economic nationalism in the US, there is growing reluctance to outsource manufacturing to China, with a preference for processing goods domestically.
> Tarrif Uncertainty – The imposition and removal of tarrifs by both the countries create a sense of uncertainty to business increasing the difficulty to make long term decisions.
These challenges have to be handled diplomatically to sustain a healthy relationship between the US and China, where both the countries could be benefitted, one by accessing its biggest export market and the other’s acces to it’s largest supplier.
