Yang Global Trade and Investment

Embracing Globalization: Recasting U.S.-China Trade Relations : 

Embracing Globalization: Recasting U.S.-China Trade Relations Jiawen Yang, Ph.D. Professor International Business and International Affairs The George Washington University

The Globalization Trend: 

The Globalization Trend The classical international trade paradigm Assumptions of factor mobility Predictions of free trade Foreign direct investment Motivations It is not just capital The globalization drive in the 1990s International trade liberalization International financial liberalization What next: labor mobility across countries? Disparities in productivity and income Why people want to migrate?

The Globalization Trend: 

The Globalization Trend The impact of information technology Productivity improvement in developing countries Service outsourcing Challenges for industrial countries Loss of comparative advantage in manufacturing industries Real wage stagnation for regular-skilled workers Political pressure for protection Changing positions for industrial and developing countries in trade policies Developing countries leaning more toward free trade Industrial countries become more protetionist

U.S. – China Trade Paradigm: 

U.S. – China Trade Paradigm Comparative advantage Mutual benefits and interdependence Trade issues U.S. trade deficit The re-routing of exports to the U.S. U.S. economic sanctions China’s foreign exchange reserves The Chinese currency

Leading Exporters and Importers in World Merchandise Trade, 2003(Billion dollars and percentage): 

Leading Exporters and Importers in World Merchandise Trade, 2003 (Billion dollars and percentage) http://www.wto.org/english/res_e/statis_e/its2004_e/section1_e/i05.xls

Disagreement on U.S. Deficit NumbersMillion U.S. Dollars: 

Disagreement on U.S. Deficit Numbers Million U.S. Dollars

Export Re-routing : 

Export Re-routing U.S. China Other Economies Other Economies Exports Exports Exports

Export Re-routing : 

U.S. China Other Economies Other Economies Exports Exports Exports Invest Invest Invest Export Re-routing

U.S. Economic Sanctions against China: 

U.S. Economic Sanctions against China U.S. China Capital intensive and high tech goods Labor intensive goods Trade based on comparative advantage

U.S. Economic Sanctions against China: 

U.S. China Capital intensive and high tech goods Labor intensive goods Trade based on comparative advantage U.S. Economic Sanctions U.S. Economic Sanctions against China

Bilateral Trade and Total Trade: 

Bilateral Trade and Total Trade China’s total trade is more balanced than the U.S. – China bilateral trade flows China’s Trade Balance 2004 ($Billion)

Slide12: 

China’s Foreign Exchange Reserves ($ Billion)

MAJOR FOREIGN HOLDERS OF U.S. TREASURY SECURITIESBillions of DollarsEnd of November 2004: 

MAJOR FOREIGN HOLDERS OF U.S. TREASURY SECURITIES Billions of Dollars End of November 2004