Research On Economic Running Cycles' Inter-relationships Between China And USA

21century, China and USA are keeping steady and lasting economic growth; they are both into a new cycle of economic growth. As we know, the USA is the most developed country in the world: its total GDP is much than the other counties; its Value of Foreign Trade is also the No.1 in the world, and the US dollar is the main money in the international monetary market. China is the biggest developing country: its economic growth is rapid in recent years; in 2004, its GDP was No.6 in the world and its Value of Foreign Trade reached the No.3 in the world. Both the two countries are playing important roles in the globe economic growth. The two counties'inter-relationship of economy is more than their competition, the two counties'economic development affects the whole world economic development. During 1990s, the two counties'economy development was steady and rapid. So they debate whether the economic cycle exists between them. 2004, the Nobel Economic Prize belonged to the Real Economic Cycle, which proved the business cycle existed in the globe economic development.In the article, first, we summarize the business cycle theory, and then talk about the existing of the law in economic development. Second, through comparing the GDP growth curve and making the index of the two counties'economic development, we can clearly see each of the business cycles from 1980 and we can make the conclusion that the two counties'economic development has great inter-relation. Third, we analysis the basic theory of the foreign trade influencing the GDP, and set up the expanding Mundell-Fleming Model, then we can make a conclusion that the USA economic policies can affect the interest rate, exchange rate and the GDP of China. We can also calculate the two counties'trade multipliers through the foreign trade model. So we can have the conclusion that China and UAS own evident inter-relationships between the two counties'business cycles. Last, we analysis the causes of the two counties'economic development and make several policy suggestions.