Trade and investment between China and the US must be based on reciprocity
William Zarit says the ‘Grand Bargain’ of the past, in which the US became China’s top export market in a mutually beneficial arrangement, is no longer possible. A new deal must be struck to ensure equally open markets on both sides
China began the opening up and reform of its economy in 1978. This has resulted in unprecedented economic growth that lifted millions out of poverty.
To this day, the US is still China’s top export market. And, along with the US$250 billion of American business investment and the technology and expertise that comes with it, the US has played an important role in China’s economic success.
American consumers, companies, and political leaders benefited so much that they were willing to overlook the fact that China’s markets were much less open than America’s. This was a “Grand Bargain” that benefited both countries.
But, the grand bargain has run its course. American political leaders, responding to the weakening of America’s manufacturing sector and high unemployment rates among blue-collar workers, blame much of America’s woes on the unsustainable, lopsided economic relationship with China.