The American Economy and Institutions with Sino-US Trade

Gmeiner, Robert

doi:10.1007/978-3-030-74709-1_3

The American Economy and Institutions with Sino-US Trade

Robert Gmeiner²

Chapter
First Online: 13 July 2021

131 Accesses

Abstract

This chapter outlines economic characteristics that shape the Sino-US trading relationship and gives an overview of trade policymaking in both countries. Although this chapter focuses on the United States, much of it is relevant to other Western countries. The purpose of this chapter is twofold—(1) to lay a foundation for the theory in subsequent chapters and (2) to refute common political, often populist, arguments about the harm of trade with China and its causes. Trade is a positive sum game, but it imposes some overlooked costs. These costs are a result of the specifics of the trade policymaking processes in each country which produce a playing field asymmetrically tilted in China’s favor.

This is a preview of subscription content, access via your institution.

Chapter: USD 29.95; Price excludes VAT (USA)

eBook: USD 109.00; Price excludes VAT (USA)

Softcover Book: USD 149.99; Price excludes VAT (USA)

Hardcover Book: USD 149.99; Price excludes VAT (USA)

Learn about institutional subscriptions

Notes

1.
See FRED data series RTFPNACNA632NRUG and RTFPNAUSA632NRUG from the Federal Reserve Bank of St. Louis.
2.
Federal Reserve Economic Data (FRED) from the Federal Reserve Bank of St. Louis. Data Series RTFPNAUSA632NRUG.
3.
Federal Reserve Economic Data (FRED) from the Federal Reserve Bank of St. Louis. Data Series DPCERE1Q156NBEA.
4.
Federal Reserve Economic Data (FRED) from the Federal Reserve Bank of St. Louis. Data Series BPCCRO1Q156NBEA.
5.
U.S. Bureau of Economic Analysis International Investment Positions (IIP) Table 1.2.
6.
U.S. Bureau of Economic Analysis International Transactions (ITA) Table 1.2.
7.
U.S. Bureau of Economic Analysis International Transactions (ITA) Table 1.2.
8.
Consolidated Appropriations Act of 2018, Public Law 115–141.
9.
Trade Act of 1974, Public Law 93–618.
10.
Trade Expansion Act of 1962, Public Law 87–794.
11.
Trade and Tariff Act of 1984, Public Law 98–573.
12.
Omnibus Trade and Competitiveness Act of 1988, Public Law 100–418.
13.
Defense Production Act of 1950 (Public Law 81–774).
14.
Exon-Florio Amendment, Omnibus Trade and Competitiveness Act of 1988 (Public Law 100–418).
15.
Foreign Investment Risk Review Modernization Act of 2018, Subtitle A of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115–232).

References

Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2005. Institutions as a Fundamental Cause of Long-Run Growth. In Handbook of Economic Growth, ed. Philippe Aghion and Steven N. Durlauf, Ch. 6, 384–472. Amsterdam: North Holland.
Google Scholar
Anderson, James E., and Douglas Marcouiller. 2002. Insecurity and the Pattern of Trade: An Empirical Investigation. Review of Economics and Statistics 84 (2): 342–352.
CrossRef Google Scholar
Baldwin, Robert E. 2008. The Development and Testing of Heckscher-Ohlin Trade Models: A Review. Cambridge: MIT Press.
CrossRef Google Scholar
Barnett, Jonathan M. 2010–2011. Intellectual Property as a Law of Organization. Southern California Law Review 84: 786–858.
Google Scholar
Bils, Mark. 2009. Do Higher Prices for Goods Reflect Quality Growth or Inflation? Quarterly Journal of Economics 124 (2): 637–675.
CrossRef Google Scholar
Braw, Elisabeth. 2020. China Is Bargain Hunting—And Western Security Is at Risk. Foreign Policy, 15 April. https://foreignpolicy.com/2020/04/15/china-is-bargain-hunting-and-Western-security-is-at-risk/. Accessed 9 June 2020.
Case, Jennifer L. 2013–2014. How the America Invents Act Hurts American Inventors and Weakens Incentives to Innovate. UMKC Law Review 82: 29–77.
Google Scholar
Coe, David T., and Elhanan Helpman. 1995. International R&D Spillovers. European Economic Review 39 (5): 859–887.
CrossRef Google Scholar
Congressional Research Service. 2019a. U.S.-China Investment Ties: Overview and Issues for Congress, 28 August. https://fas.org/sgp/crs/row/IF11283.pdf. Accessed 22 October 2020.
Congressional Research Service. 2019b. Department of State, Foreign Operations and Related Programs: FY2019 Budget and Appropriations, 12 March. https://fas.org/sgp/crs/row/R45168.pdf. Accessed 12 March 2020.
de Rassenfosse, Gaétan., Alfons Palangkaraya, and Elizabeth Webster. 2016. Why Do Patents Facilitate Trade in Technology? Testing the Disclosure and Appropriation Effects. Research Policy 45 (7): 1326–1336.
CrossRef Google Scholar
Dmitrieva, Katia. 2016. Vancouver Tax Pushes Chinese to $1 Million Seattle Homes. Bloomberg, 4 December. https://www.bloomberg.com/news/articles/2016-12-04/vancouver-housing-tax-pushes-chinese-to-1-million-seattle-homes. Accessed 6 March 2020.
Doody, Patrick A. 2012. Comprehensive Legislative History of the America Invents Act. McLean, VA: Pillsbury Winthrop Shaw Pittman. https://www.pillsburylaw.com/images/content/4/6/v2/4679/AIA-LegislativeHistory-final1.pdf. Accessed 8 June 2020.
Falvey, Rod, Neil Foster, and David Greenaway. 2006. Intellectual Property Rights and Economic Growth. Review of Development Economics 10 (4): 700–719.
CrossRef Google Scholar
Frankel, Jeffrey A., and David H. Romer. 1999. Does Trade Cause Growth? American Economic Review 89 (3): 379–399.
CrossRef Google Scholar
Francis, David. 2017. The Lights Are on at the Committee on Foreign Investment in the United States, but Nobody Is Home. Foreign Policy, 22 June. https://foreignpolicy.com/2017/06/22/the-lights-are-on-at-the-committee-on-foreign-investment-in-the-united-states-but-nobody-is-home/. Accessed 14 September 2020.
Greenspan, Alan. 1996. The Challenge of Central Banking in a Democratic Society. Acceptance Speech of the 1996 American Enterprise Institute Francis Boyer Award. https://www.aei.org/research-products/speech/the-challenge-of-central-banking-in-a-democratic-society/. Accessed 28 October 2020.
Grossman, Gene M., and Elhanan Helpman. 2005. A Protectionist Bias in Majoritarian Politics. Quarterly Journal of Economics 120 (4): 1239–1282.
CrossRef Google Scholar
Gwartney, James, Robert Lawson, Joshua Hall, and Ryan Murphy. 2018. Economic Freedom of the World: 2018 Annual Report. Fraser Institute. https://www.fraserinstitute.org/studies/economic-freedom. Accessed 31 July 2019
Hall, Robert E., and Charles I. Jones. 1999. Why Do Some Countries Produce So Much More Output Per Worker Than Others. Quarterly Journal of Economics 114 (1): 83–116.
CrossRef Google Scholar
Helpman, Elhanan, and Paul R. Krugman. 1985. Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy. Cambridge: MIT Press.
Google Scholar
Heritage Foundation. 2020. 2020 Index of Economic Freedom. https://www.heritage.org/index/ranking. Accessed 4 February 2021.
Jaffe, Adam B., and Josh Lerner. 2004. Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress and What to Do about It. Princeton, NJ: Princeton University Press.
Google Scholar
Kim, Yee Kyoung, Keun Lee, Walter G. Park, and Kineung Choo. 2012. Appropriate Intellectual Property and Economic Growth in Countries at Different Levels of Development. Research Policy 41 (2): 358–375.
CrossRef Google Scholar
Kolesnikova, Natalia A., and Yang Liu. 2011. Jobless Recoveries: Causes and Consequences. Regional Economist, April. https://www.stlouisfed.org/publications/regional-economist/april-2011/jobless-recoveries-causes-and-consequences. Accessed 21 October 2020.
Krugman, Paul R. 1979. Increasing Returns, Monopolistic Competition, and International Trade. Journal of International Economics 9 (4): 469–479.
CrossRef Google Scholar
Krugman, Paul R. 1980. Scale Economies, Product Differentiation, and the Pattern of Trade. American Economic Review 70 (5): 950–959.
Google Scholar
Levchenko, Andrei A. 2013. International Trade and Institutional Change. Journal of Law, Economics, and Organization 29 (5): 1145–1181.
CrossRef Google Scholar
Maskus, Keith E., and Mohan Penubarti. 1995. How Trade-Related Are Intellectual Property Rights. Journal of International Economics 39 (3–4): 227–248.
CrossRef Google Scholar
Maskus, Keith E., and Lei Yang. 2018. Domestic Patent Rights, Access to Technologies, and the Structure of Exports. Canadian Journal of Economics 51 (2): 483–509.
CrossRef Google Scholar
Mattappally, Jay M. 2012. Goliath Beats David: Undoing the Leahy-Smith America Invents Act’s Harmful Effects on Small Businesses. Loyola Law Review 58 (4): 981–1034.
Google Scholar
Mertha, Andrew C. 2005. The Politics of Piracy: Intellectual Property in Contemporary China. Ithaca, New York: Cornell University Press.
Google Scholar
Miozzo, Marcela, Panos Desyllas, Hsing-fen Lee, and Ian Miles. 2016. Innovation Collaboration and Appropriability by Knowledge-Intensive Business Services Firms. Research Policy 45 (7): 1337–1351.
Google Scholar
Mordant, Nicole. 2016. B.C. Housing Tax Drives Down Foreign Buying in Vancouver. BNN Bloomberg, 29 November. https://www.bnnbloomberg.ca/foreign-buyers-accounted-for-3-of-vancouver-home-sales-in-wake-of-tax-1.619325. Accessed 6 March 2020.
Nunn, Nathan, and Daniel Treffler. 2014. Domestic Institutions as a Source of Comparative Advantage. In Handbook of International Economics, vol. 4, 263–315. Amsterdam: Elsevier.
Google Scholar
Office of Personnel Management. 2020. Open Government Data: Federal Agencies List. https://www.opm.gov/about-us/open-government/Data/Apps/Agencies/. Accessed 12 March 2020.
Office of the United States Trade Representative. 2020. Mission of the USTR. https://ustr.gov/about-us/about-ustr. Accessed 12 March 2020.
Organization for Economic Cooperation and Development. 2009. What Can the TiVA Database Tell Us? https://www.oecd.org/sti/ind/whatcantivadatabasetellus.htm. Accessed 28 October 2020.
Paterson, Stewart. 2018. China, Trade, and Power: Why the West’s Economic Engagement Has Failed. London: London Publishing Partnership.
Google Scholar
Preeg, Ernest H. 2003. Exchange Rate Manipulation to Gain an Unfair Competitive Advantage. In Dollar Overvaluation and the World Economy, ed. C. Fred Bergsten and John Williamson. Washington: Institute for International Economics.
Google Scholar
Public Citizen. 2020. Chinese Investment in the United States Database 2002–2016. https://www.citizen.org/article/chinese-investment-in-the-united-states-database/. Accessed 22 October 2020.
Rappeport, Alan. 2020. U.S. Says China Is No Longer a Currency Manipulator. New York Times, 13 January. https://www.nytimes.com/2020/01/13/us/politics/treasury-china-currency-manipulator-trade.html. Accessed 7 April 2020.
Roach, Stephen. 2014. Unbalanced: The Codependency of America and China. New Haven: Yale University Press.
Google Scholar
Sigman, Hilary. 2002. International Spillovers and Water Quality in Rivers: Do Countries Free Ride? American Economic Review 92 (4): 1152–1159.
CrossRef Google Scholar
U.S. Bureau of Economic Analysis. 2020. Table 1.3 U.S. International Transactions, Expanded Detail by Area and Country. https://apps.bea.gov/iTable/iTable.cfm?ReqID=62&step=1. Accessed 28 February 2020.
U.S. Bureau of Labor Statistics. 2020. Data Series ID CES3000000001. All Employees, Thousands, Manufacturing, Seasonally Adjusted. https://data.bls.gov/timeseries/CES3000000001. Accessed 28 February 2020.
U.S. Census Bureau. 2019. Foreign Trade. Top Trading Partners December 2019. https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html. Accessed 28 February 2020.
U.S. Chamber of Commerce. 2019. U.S. Chamber international IP Index 2019. Global Innovation Policy Center. https://www.theglobalipcenter.com/wpcontent/uploads/2019/02/023593_GIPC_IP_Index_2019_Full_03.pdf. Accessed 21 June 2021.
U.S. Department of State. 2020. United States Department of State: Mission. https://fas.org/sgp/crs/row/R45168.pdf. Accessed 12 March 2020.
U.S. Department of the Treasury. 2020. Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. Report to Congress January 2020. https://home.treasury.gov/system/files/136/20200113-Jan-2020-FX-Report-FINAL.pdf. Accessed 7 April 2020.
U.S. Department of the Treasury. 2019. Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. Report to Congress May 2019. https://home.treasury.gov/system/files/206/2019-05-28-May-2019-FX-Report.pdf.
U.S. Securities and Exchange Commission. 2020. “U.S. Investors’ Exposure to Domestic Chinese Issuers” Division of Risk and Economic Analysis. Risk Spotlight, 6 July. https://www.sec.gov/files/US-Investors-Exposure-to-Domestic-Chinese-Issuers_2020.07.06.pdf. Accessed 20 November 2020.
Vandenburg, Eric P. 2013. America Invents Act: How It Affects Small Businesses. Idaho Law Review 50 (1): 201–227.
Google Scholar
West, Darrell M., and Christian Lansang. 2018. Global Manufacturing Scorecard: How the U.S. Compares to 18 Other Nations. Brookings Institution, 10 July. https://www.brookings.edu/research/global-manufacturing-scorecard-how-the-us-compares-to-18-other-nations/. Accessed 28 February 2020.
White, William R. 2012. Ultra Easy Monetary Policy and the Law of Unintended Consequences. Federal Reserve Bank of Dallas Globalization and Monetary Policy Institute Working Paper No. 126, September. http://www.dallasfed.org/assets/documents/institute/wpapers/2012/0126.pdf. Accessed 3 March 2020.
World Bank. 2019. World Integrated Trade Solution. https://wits.worldbank.org/CountryProfile/en/Country/CHN/Year/2017/TradeFlow/EXPIMP/Partner/by-country. Accessed 27 August 2019
World Bank Data. 2019. Gross Savings (% of GDP). https://data.worldbank.org/indicator/NY.GNS.ICTR.ZS. Accessed 31 July 2019
World Economic Forum. 2019. The Global Competitiveness Report 2019, ed. Klaus Schwab. http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. Accessed 3 December 2020.
World Intellectual Property Organization. 2019. Global Innovation Index (GII) 2019. https://www.wipo.int/global_innovation_index/en/2019/index.html. Accessed 13 September 2019
World Trade Organization. 2019. World Trade Statistical Review 2019. https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf. Accessed 28 February 2020
Yglesias, Matthew. 2019. Trump’s Designation of China as a Currency Manipulator, Explained. Vox, 6 August. https://www.vox.com/2019/8/6/20756215/trump-china-currency-manipulator-trade-war. Accessed 7 April 2020.

Download references

Author information

Authors and Affiliations

Methodist University, Fayetteville, NC, USA
Robert Gmeiner

Authors

Robert Gmeiner
View author publications
You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and Permissions

Copyright information

About this chapter

Cite this chapter

Gmeiner, R. (2021). The American Economy and Institutions with Sino-US Trade. In: How Trade with China Threatens Western Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-74709-1_3

Download citation

DOI: https://doi.org/10.1007/978-3-030-74709-1_3
Published: 13 July 2021
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-74708-4
Online ISBN: 978-3-030-74709-1
eBook Packages: Economics and FinanceEconomics and Finance (R0)