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The US has become heavily dependent on China, which is now America’s third largest export market (behind Canada and Mexico).
The US has become heavily dependent on China, which is now America’s third largest export market (behind Canada and Mexico).

China Defies US With New Europe Trade Ties

Both China and the EU have been directly threatened by Trump and have expressed fears that the new US administration’s economic policies would disrupt their economies

China Defies US With New Europe Trade Ties

Economic relations between China and the European Union may have entered a new era. EU officials announced an early international summit in Brussels to forge new trade ties with Beijing amid protectionist rhetoric from President Donald Trump.
China, which traditionally meets with the EU each July, has reportedly requested the economic summit be hosted as soon as possible in order to quickly formulate a defense for Trump’s upcoming policies that are widely expected to prioritize domestic production over foreign commerce. IBTimes reported.
Meanwhile, the EU saw the meeting as an opportunity to ascertain Chinese support for the UN and other international entities often dismissed by the new White House administration and Russia, an unnamed EU official told Reuters.
China and the EU have often not seen eye-to-eye politically as Beijing occasionally sides with the EU’s nemesis, Russia, on foreign policy issues such as the Syrian civil war. However, both China and the EU have been directly threatened by Trump and have expressed fears that the new US administration’s economic policies would disrupt their economies.
While China has said its own move to bolster domestic markets in recent years meant Trump’s proposed trade war of tariffs as high as 45% would have a limited effect on Beijing, a significant drop in exports last year have raised concerns that the world’s biggest economy could slow in growth.
The UK’s upcoming departure from the EU, which Trump hailed as “great thing”, has also factored into a stunted GDP forecast among member states and even questions about the EU’s future.
US-China Tensions
Three weeks into his administration, Trump has remained ambiguous about much of his foreign policy strategy. His real estate company, the Trump Organization, was recently granted a lucrative trademark deal in China, Global Research reported.
In a reversal, the Trump administration has left little doubt that it will be going after China. Its initial pronouncements point to a wide range of economic and political sanctions–from imposing punitive tariffs and designating China as a “currency manipulator” to denouncing Chinese territorial claims in the South China Seas to embracing Taiwan and establishing the long sacrosanct “One-China” policy as a bargaining chip.
This approach suffers from one critical strategic flaw: It is based on the mistaken belief that a newly muscular United States has all the leverage in dealing with its presumed adversary–or that any Chinese response is hardly worth considering.
Two-Way Street
Contrary to conventional wisdom, the US and Chinese economies actually are both heavily dependent on each other. Shifts in the support of either nation for the other have played an important role in shaping the growth experience of both economies over the past several decades. This two-way relationship is likely to have equally profound implications for what may now lie ahead.
The US has long been one of China’s largest and most lucrative export markets–and thus a central pillar of its spectacular 35-year development trajectory. Exports went from 5% of Chinese GDP in 1979 to 36% in pre-crisis 2007–by far the sharpest increase of any major sector in the Chinese economy over that same period.
Since 2000, the United States has accounted for an average of 19% of total Chinese exports–easily the largest country-specific market for Chinese exports, albeit slightly below the multi-country pan-European share beginning in 2006. Needless to say, closing off the US market, as the Trump Administration appears to be threatening, would certainly crimp Chinese economic growth–a threat that China hardly takes lightly.
But there is another side to this coin: The US has also become heavily dependent on China, which is now America’s third largest export market (behind Canada and Mexico) and its fastest growing source of foreign demand for American-made products over the past decade.
Moreover, with China long the largest foreign holder of US treasuries and other dollar-based assets–albeit slipping slightly below Japan in late 2016–its hoard of over $1.25 trillion of treasuries and other dollar-based assets has played a vital role in funding America’s chronic budget deficits.

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