The Codependency Of Sino-U.S. Economic Relations After The Global Financial Crisis

Because of its rapid growth and fundamental influence,the Sino-U.S.economic relations in 21 st Century has received wide attention by the international society.Deep integration and vast unbalancing has become the main feature of this relationship and thus the focus of the World.After the global financial crisis,people have realized that the former modes of economic development in both of the two countries are now out of date.On the contrary,achieving the economic balance between the domestic and overseas markets and finally the balance between the economic relations of the two countries through pushing forward their own structural reforms will have great effect on not only the two countries but also the steadiness and development of the global economy and financial system.Therefore,the rebalancing of the Sino-U.S.economic relationship has become a hot topic of the international society.In 2010,China replaced Japan to become the second largest economic entity in the World,meanwhile the economic relationship between China and the U.S.also changed and became the one that is between the biggest emerging market and biggest developed country.So vital is this change in the World economy after the global financial crisis that it actually redefines the bilateral economic relations between China and the U.S.That is,the current Sino-U.S.economic relationship is not only the most important but also the most complicated in the world.Its complexity lies in its asymmetry,i.e.the unbalancing in it,which is shown obviously as “balance of financial terror”.The unbalancing fully reflects the fundamental change of the essence of the economic relations between the two countries.That is,the original trading and investment relations have become the relations between a “trading country” and a“financial country”.The unbalancing in the Sino-U.S.economic relationship is not a simple bilateral economic unbalancing,but an important part of a global economic unbalancing.The theoretical significance of this study lies in the following aspects:first,trough the study of the unbalancing and rebalancing in Sino-U.S.economic relations,the essence of the relationship could be discovered,which will widen thescope of similar studies and therefore enhance the domestic study on Sino-U.S.economic relations.Secondly,this study will assist the domestic academia with accurate predictions and judgement on the development trend of Sino-U.S.economic relationship,thus provides theory basis for the decision makers to carry out structural reforms and transform the economic development patterns.The practical significance of this study is,through studying the way and goal of the rebalancing in the Sino-U.S.economic relations,it could provide decision-making reference for the Chinese government to carry out better economic restructuring,especially for those related departments to develop economic strategies towards the U.S.The second chapter of the dissertation examines the rapid development of Sino-U.S.economic relations after China joined the World Trade Organization(WTO).This rapid development of the bilateral trade relationship and the close correlation in the bilateral investment relationship between China and the U.S.are from the influence of the two countries' economic growth modes and dollar standard system.According to the comparative advantage theory,China chose export-led economic growth strategy,resulting in a continuous rapid growth of GDP and export,which has pushed the rapid growth of Sino-U.S.bilateral trade relations.The U.S.follows for a long time the consumption-oriented economic growth model,and individual consumption mainly depends on loans,therefore high indebtedness and low saving has become one feature of its economy.Thus the U.S.greatly depends on external financing to supplement its savings shortage.However,China is a production-led country whose domestic savings rate ranks the first in the whole world.Therefore,the U.S.needs to absorb Chinese savings through Chinese trade deficit,and thus heavily depends on Chinese savings surplus.The positive influences of dollar standard system on the Sino-U.S.economic relations are: for a long time,China has closely followed the U.S.exchange rate and greatly avoided Renminbi revaluation caused by the“intermittent devaluation” of the U.S.dollars,and thus enhanced the rapid growth of Chinese foreign trade,especially the one with the U.S.;meanwhile,the U.S.Dollars has also become a financial asset that can be effectively “stored up” by Chinese authority as a currency reserve.The unbalancing of Sino-U.S.trade relations reflects the obvious asymmetry in the bilateral trade relations between the two countries.However,as a structural imbalance,this unbalancing reflects the binary structure of the bilateral trade relationship between the two countries,i.e.“Stiglitz DoubtfulRecycling”.The negative influences of the dollar standard system on Sino-U.S.economic relations are: America,as a financial country,actually makes use of the capitals of China,a trading country;while China steps into a “Dollar trap” in its foreign exchange reserve management.The third chapter of the dissertation discusses and analyzes the effects that the global financial crisis has on the Sino-U.S.economic relationship.The subprime mortgage crisis that broke up in 2007,together with the global financial crisis caused by it,is not only the first global financial crisis since the 1980 s when the financial globalization witnessed a rapid growth,but also a financial crisis that was rarely seen over the years in those central countries of the international monetary system.This crisis had serious effects on the Sino-US economic relations.In the aspect of bilateral trade relationship,this crisis not only influenced China's export to America,but also led to worsening trade friction in the bilateral trade and the politicized issue of renminbi exchange rate.In the aspect of bilateral investment relations,on one hand,since 2009,the growth rate of the scale of American direct investment in China has slowed down and negative growth of investment stock has occurred for two years in a roll;on the other,many American financial institutions were trapped into liquidity crisis or even went bankruptcy during the crisis,which confronts the Chinese investors of U.S.agency debt and financial bond with default risk.The four round of quantitative easing monetary policy that the Federal Reserve Board adopted after the outbreak of the global financial crisis also had bad influence on China's monetary policy.That is,on one hand,China has become more dependent on the U.S.monetary police,on the other,China has become more dependent on the U.S.financial market.Therefore,no matter from the aspect of trade or investment or financial terror balance,the unbalancing of the Sino-U.S.economic relations are temporary.The fourth chapter of the dissertation focuses on the rebalancing of the Sino-U.S.economic relations after the global financial crisis on the basis of the world economy structure.The unbalancing that covers such fields as Chinese and American bilateral trade,investment and finance,etc.is from the Sino-U.S.economic unbalancing,which in turn worsens the economic unbalancing in the two countries.As time flies,the two countries face more serious interior and exterior unbalancing and are struck in it.Therefore,how to reverse the economic unbalancing is the prerequisite of realizing the rebalancing of the Sino-U.S.economic relations.After the global financial crisis,Chinese economic rise has greatly influenced the global economic structure.First,as a very important and steady power,the continuous and rapid growth of Chinese economy to some extent offsets the effects that the economic recession and the slow recovery afterwards in those developed countries have on the global economic growth,and thus China has become the main power to push the global economic recovery.Additionally,the global economic crisis didn't fundamentally change the status of China and the US in the international division of labor.Third,China has become more and more important in the global trade structure.Fourth,China has become the second biggest economic entity after the global financial crisis and this is the biggest change in the international economic relations.As two of the most systematically important countries,China and the U.S.are constructing the bipolar pattern of international economic relations.As the rise of China's economy,the state of being more complementary than competitive for the two countries in their bilateral trade relations will gradually change.As long as the U.S.continues the huge deficit in its trade with China,the strained relations in their trade will continue to exist for a long time as a characteristic of Chinese and American relations,to make it hard to realize the rebalancing of Sino-U.S.economic relations.After the rise of China's economy,in considering state safety,the “committee on foreign investment of the U.S.” would be more “strict” in auditing the Chinese companies that invest in the U.S.Meanwhile,as both China and the U.S.haven't signed bilateral investment treaty,it is difficult to realize the rebalancing.The fifth chapter of the dissertation analyzes and explores the path choice and goal of the rebalancing of Sino-U.S.economic relations.How to achieve the rebalancing in the Sino-U.S.economic relations is a vital question that both the two countries need to consider about after the global financing crisis.After the outbreak of the global financial crisis,China also suffers slow economy growth.But,at the same time,both countries started to change their economic growth modes and adjust their economic structures.It is believed in this thesis that the path choice for the rebalancing of the Sino-U.S.economic rela.turns from a consumer into a producer.Therefore,China should fasten its pace in enhancing economic restructuring and structural reforms,shift its trade development mode,reverse the unbalancing of saving and investment,and overcome the bottleneck of the financial development.On the contrary,the U.S.should carry out the adjustment of economic structure,activelydevelop the real economy and discard the credit consumption model.The goal of this rebalancing is to morph the “negative dependence” before the crisis into the “positive dependence”.Therefore,the institutionalized bilateral cooperation mechanism(i.e.We will further consolidate and develop the bilateral strategy and economic dialogue mechanisms;we will quickly complete the Sino-U.S.bilateral investment treaty negotiations and strengthen bilateral financial co-operations)and RMB internationalization strategy should be introduced,so that China could get rid of its dependence on the dollar standard system.The sixth chapter of the dissertation is the conclusion and expectations.After analyzing the Sino-U.S.economic relations when the U.S.president Trump is in office,the author deems that Trump acts arbitrarily in the field of bilateral trade without considering the big trend of trade liberalization,and the chance for the US to launch a full-scale trade war with China is little.But the trade frictions on certain industry or certain product between China and the U.S.could be commonly seen.The possible innovation of the dissertation lies in two aspects.First,compared with the previous studies on Sino-U.S.economic relations,the fourth chapter of this thesis probes deeply the relations between China's economic rise after the global financial crisis and the rebalancing of the Sino-U.S.economic relationship,and comes to a new point,that is,with the rise of China's economy,it is hard to realize the rebalancing of both Sino-U.S.economic relations and bilateral investment relations.Second,in the fifth chapter,as for the path choice and goal of the rebalancing of Sino-U.S.economic relations,the author believes that the shift from “negative dependence” to “positive dependence” between Chinese and American economy is the goal of realizing the rebalancing of Sino-U.S.economic relations.Besides,the author also defines“positive dependence” and on basis of this definition,raises a point that to realize this shift,we should emphasize on introducing institutionalized bilateral cooperation mechanisms.That is,further strengthen and develop bilateral strategic and economic dialogue mechanism,quickly finish bilateral investment treaty negotiations,strengthen bilateral financial cooperation and get rid of our dependence on the dollar standard system through the strategy of RMB internationalization.