The US-China trade relationship Research Paper Example | Topics and Well Written Essays - 2750 words

The US-China trade relationship - Research Paper Example The United States imposed selective controls on trade with China immediately after the communist forces commenced to win the civil war in the early 1949. U.S export controls were then progressively tightened until a whole ban was set in place against China by the U.S following the outbreak of the Korean War (Louis and Bull 127). The United States was fundamental in creating the coordinating Committee on Multinational Export Controls (COCOM). It comprised of representatives of the North Atlantic Treaty Organization and Japan. It was intended to supervise a ban, which was imposed on China and the U.S. This study reveals that, by 1951, no trade existed between the two countries. In 1971, China recaptured its seat in the UN. President Richard Nixon made a historic visit to China In 1972 and these unfolding events compelled COCOM to loosen the export controls and allowed China to get equal treatment like the Soviet Union (Louis and Bull 124). This forced the US to permit its populace to make purchases from the Republic of China and compensate for them in dollars. The move by COCOM made USA’s exports be under the identical export control precincts as sales made to the Soviet Union. The trend of partial loosening of barriers continued until after nearly twenty years trade between the two countries has been seen growing tremendously (Louis and Bull 124). The total trade between the two nations has expanded from zero to nearly $2.4 billion in the late 1970s. This is the year when the two countries formally established diplomatic relations. The US and China formally signed the Trade Relation Agreement. This agreement was intended to accord each of the two nations the most favoured nation treatment based on the reciprocal trend (Lehmann and Lehmann 158). This study establishes that, this was just the begging of the numerous trade agreements that followed in the subsequent years. Some of them included Agreement on Civil Aviation and Sea Transportation and the Agreement on Avoidance of Double Taxation. In addition, three joint committees on commerce, science and technology and economic affairs were formed. These committees were intended to serve as effective instruments of promoting dialogue between the two nations. As from 1981, China was given relatively higher levels of the USA’s technology than the Soviet Union. COCOM adopted a green line policy toward China in 1985 (Lehmann and Lehmann 159). This policy gave preferential licensing treatment, which enabled China to control up to 27 categories of items for exports to China. China became more advantaged than other countries prescribed under the COCOM. This saw China grow in labour intensive industries, which later became China’s driving force for China’s exports. It is worth noting that, by 1988, China’s exports had reached over $40 billion and total trade topped 480 billion. This study establishes that, the USA imposed broad sanctions against China after the Tiananmen Square incident in the summer 1989. The sanctions included a deferral of authorized and military interactions between the two nations, a ban on the US trade financing and investment insurance for China projects and a prohibition on exports to military and police