The American Negative Effects Of New Trade Protectionism Towards China

The export-oriented economic development mode has been prevailing for more than 3 decades in China since the Reform and Opening-up. Thanks to the mode, the foreign trade has enjoyed fast development and contributed to a great extend to China's economic growth. At the same time, it has also brought some side-effects, such as high foreign trade dependency ratio and increasingly severe foreign trade security problems. The trade relationship between China, the largest developing country and the US, the largest developed country, has inevitably become the most important trade relationship in the world. In recent years, with the fast development of china's economy, The US has implemented a wide range of trade protectionism policies against China aimed at containing China's rising and defending US's world leadership. These policies not only impaired the healthy development of China's economy, but also did a lot of harm to the US economy. Based on the principles of Marxist Economics and the methods of econometrics, this paper analyses the negative effects of the US anti-China trade protectionism, and in the end specific policy proposals are given according to China's current situation.There are 7 chapters and each of them will be introduced briefly as follows:Chapter 1 is the introduction in which background and value of the research are introduced and literature review is conducted. In recent years, the US anti-China trade protectionism, getting more and more severe with increasing amount involved, has done more and more harm to China's economy. Trade is mutually beneficial and protectionism is a double-blade sword. While the US is implementing its anti-China protectionism to suppress China, its own benefits are also impaired. Through the literature review, less research on the negative effects of anti-China trade protectionism is found, especially on the negative effects on the US. Under this background, the paper analyzes the negative effects of the US anti-China trade protectionism on both countries based on Marxist economics in the hope of warning the US and providing theoretical support for China forming appropriate countermeasures.Chapter 2 researches on the mutual benefits of the Sino-US trade. Since the Reform and Opening-up, the Sino-US trade has been keeping fast development, and both countries have become each other's important trading partner. Since China took export-oriented development strategy, foreign trade has been tremendously contributing to China's economic development, such as helping upgrade industry structure and promote employment, national income and living standards. The Sino-US trade benefits the US as well. Even though the Sino-US trade deficit has been enlarging, the deficit will not do harm to American industry with the US dollar being the world currency in the current international monetary system. On the contrary, American consumers can benefit from purchasing large quantities of'made-in-China'products with good quality at low prices. Moreover, China bought substantial amount of US bonds as portfolio investment, which has greatly promoted the US economic growth.Chapter 3 analyzes the determinants and objectives of the US anti-China trade protectionism. After the founding of new China, the US has been adjusting its trade protectionism against China continuously according to its political and economic needs. However, the political needs of the US outweigh its economic needs when constituting its trade policies toward China. Moreover, under the influence of the American voting system, American interested parties can influence the decision-making process of the government through various channels as far as the trade policies toward China are concerned. Through the study of economic development and corresponding policies of both countries in different periods, we find that when two countries have a tremendous difference in terms of economic strength, trade conflicts are minor both in quantity and harm, while as China is rising and the difference between China and the US is getting smaller and smaller, the US trade protectionism against China is doing more and more harm to China. Combined with the US protectionism against the UK, the Soviet Union and Japan in American economy development history, we find out the fundamental objective of the US anti-China trade protectionism is to contain and defer China's rising to keep the leadership of the US in the world.Chapter 4 researches into the US anti-China trade protectionism policies and analyzes the reasons why the US had swung from trade protectionism to free trade back to trade protectionism again, based on the development history of the UK. The anti-China trade protectionism includes limiting the exportation of high-tech products to China, pressuring RMB to appreciate, starting trade remedy measures such as anti-dumping and anti-subsidy measures and setting up non-tariff barriers such as technology barriers and green barriers. Viewed from the economic development history, the US and the UK had similar experiences in foreign trade. They both advocated trade protectionism in the early period of economic development, and called for free trade when they were economically strong, then turned back to trade protectionism as their economic advantage was lost. The current US anti-China trade protectionism is implemented as their economic strength is worsening. As the UK protectionism failed in the end, the US anti-China trade protectionism cannot contain China's rising and the biggest victim of the game will turn out to be the US itself.Chapter 5 researches on the harm of anti-China trade protectionism to the US. The US is implementing trade protectionism against China through either restricting importing from China or exporting high-tech products to China. By restricting exportation of high-tech products to China, the US actually lost a huge market, which led to the impotent exportation of manufactures, the twisted industry structure and the increasing unemployment rate. The US erected many trade barriers to restrict the importation from China, which caused American consumers unable to get reasonably priced and good quality Chinese goods and impaired the interest of consumers, hence did harm to the US social well-being. Also empirical analysis shows that trade protectionism in the name of protecting workers and consumers has actually impaired American workers and consumers.Chapter 6 researches on the damage caused by anti-China trade protectionism. RMB has been appreciating in response to the US pressure although the appreciation is almost unbearable to Chinese economy, which as a result has caused the contradiction of inward RMB depreciation and outward RMB appreciation, diminishing international competitiveness of Chinese goods and increasing difficulty of China's macroeconomic management. Moreover, the escalating Sino-US trade conflict led to deteriorating trade environment, increasing bankruptcy of small and medium-sized exporting firms and more unemployment. The US anti-China trade protectionism has impeded the development of Chinese economy and further upgrading of China's industry structure.Chapter 7 researches on the policies and measures that China should take facing the US trade protectionism against China. Although China's economy enjoys fast development given the US trade protectionism, China's foreign trade still has many problems, such as low value-added exports, resources wasting, unreasonable structure of exporting areas and exporting firms. Therefore, China should promote the Change in the mode of foreign trade growth, upgrade the structure of exports, and transform China from a big nation to a strong nation in foreign trade. Moreover, China should strengthen regional cooperation and expand foreign investment in order to create a better external trade environment and to avoid trade barriers.In summary, the Sino-US trade is mutually beneficial and the US trade protectionism against China is a two-blade sword, which will do harm to both sides. With the fast development of China's economy, the US trade protectionism against China will not cease, so rising China should be prepared with responsive policies and measures to confront the US protectionism.