As U.S. officials prepare to negotiate trade deals with China, it’s crucial to recognize some of the most damaging misconceptions about trade between our two nations that have spread as tensions have risen.
And make no mistake: these negotiations are a big deal, as shown by those attending. The delegation from the U.S. includes free trade proponents Treasury Secretary Steven Mnuchin and National Economic Council director Larry Kudlow, as well as economic nationalists Commerce Secretary Wilbur Ross, United States Trade Representative Robert Lighthizer, and trade adviser Peter Navarro.
Here are five important things to know about U.S. trade with China:
1. U.S. exports of goods to China have been increasing. By focusing on the trade deficit, U.S. rhetoric insinuates that American companies are losing access to the Chinese market. But this is not true.
In fact, a new report by the U.S.-China Business Council found that American goods exports to China have increased by 86 percent since 2008. A dip in exports occurred in 2015 and 2016, but in 2017 U.S. exports to China reached their highest value in ten years.
2. U.S. exports of services is increasingly important. As all U.S. exports continue to increase, services now make up one third of these exports. Since 2008, exports of services to China has increased 350 percent from $16 billion to $56 billion.
This is natural for any developed economy like the U.S. that is increasingly a service-led economy. Services make up roughly 69 percent of U.S. GDP (79 percent if you exclude government expenditures from GDP) compared to just 52 percent in China. […]
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