{"id":778,"date":"2008-11-16T00:04:01","date_gmt":"2008-11-16T05:04:01","guid":{"rendered":"https:\/\/www.chinacenter.net\/?p=778"},"modified":"2023-04-07T13:32:17","modified_gmt":"2023-04-07T17:32:17","slug":"u-s-economic-troubles-may-affect-u-s-china-economic-relations","status":"publish","type":"post","link":"https:\/\/www.chinacenter.net\/2008\/china-currents\/7-1\/u-s-economic-troubles-may-affect-u-s-china-economic-relations\/","title":{"rendered":"U.S. Economic Troubles May Affect U.S.-China Economic Relations"},"content":{"rendered":"
In recent years, but especially since the 1990s, the U.S. and China have become increasingly economically interdependent. For most of that time, both economies have been doing well, and for much of it, growing at historic highs for both. Today, the U.S. faces a potential economic downturn. Some analysts worry that it will be more severe than after the dot-com bubble burst at the beginning of this decade.<\/p>\n
If the U.S. economy hits troubled times, what will this mean for the U.S.-China economic relationship? For many companies, investors and consumers the answer will affect decisions and prospects for some time to come.<\/p>\n
Barring a depression in the U.S., it is argued here that overall trade flows may not be substantially affected, and Chinese foreign investment into the U.S. could even get a boost and help ameliorate the economic downturn. To be sure, China\u2019s exports to the U.S. may slow some, especially in high-end and construction related sectors, and China\u2019s economic growth rate is expected to decrease this year. But that is due primarily to Chinese domestic issues rather than what might happen in the U.S.<\/p>\n
Before the current U.S. economic turmoil, there were already some changes underway in the two countries\u2019 economic relationship. First, the European Union recently surpassed the U.S. as China\u2019s largest trading partner. Second, issues with the quality of some of the goods the U.S. was importing from China, such as toys, led to recalls and disruptions in supply. Third, leaders in China have moved to initiate policies to build domestic demand in China in order to lower the country\u2019s reliance on exports, or external demand. Fourth, the Chinese currency peg to the dollar as been allowed to appreciate since mid 2005\u2014to date, about 13 percent. Fifth, in addition to currency appreciation effects, inflation and other cost pressures in China have also contributed to increased prices of China\u2019s exported products. And sixth, as a result of the new \u201cGoing Out\u201d policy, many Chinese companies are now allowed\u2014and in fact encouraged–to invest abroad, and some of them have begun operations in the U.S.<\/p>\n