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US and China: The Dilemma of Reciprocity

US and China have long been in an economic competition. From one election to another, this main conflict of US with China remains. It can be caused either by US competitive nature, or just the mere fact that there is impartiality in the current trade agreement between the two countries. Either way, it is clear to the Americans that something has to be done one way or another. On the other hand, it is not as simple as a statement made or another crafted policy implemented. There is so much at stake that should be taken into consideration. This is primarily concerning the historical relationship between the two countries who have been exposed to various political issues such as China’s alleged invasion of US companies, and the US stand on the Nanking Massacre. The issue with US-China Import Deficit is not easy to solve with just a simple mathematical equation but must be solved with caution.

In the current US administration, President Trump made his intentions clear about being “tough” in dealing with China. He was both clear and repetitive about his plan although not particular on the how. This raised a lot of questions in terms of the effects of these statements to the political state of US and China. There is far more depth to the issue than just tightening the opportunities for the Chinese to do business in the United States. Reciprocity can lead to several other things such as the return of difficulty towards the US businesses that are either already present in China or are aiming to penetrate the Chinese Market. Furthermore, to strain the business relations between the two countries may affect the prices of goods at which they import to each other. This means that the lower class of the United States will suffer the most as the prices of goods such as cell phones, cheap gadgets, and garments that are made to be affordable for this market.

On the other hand, the presence of Chinese Investors is becoming even more significant in the United States, purchasing one US company after another. These companies come from various industries like manufacturing, entertainment, news organizations, Hospitality and many other sectors. Recently, Chinese Contractors also have been very aggressive in pursuing US government projects that put them in competition with US Contractors. It would seem that the US Business Policy in terms of welcoming Chinese Businesses in the country, is highly welcoming. Now, this is not necessarily a bad thing if one looks at this single scenario by itself. However, the situation for US businesses in China are not half as welcome for several years now and Americans believe that Chinese are gaining more and more compared to the Americans in the current state of the trade agreement.

Today, China is still limiting foreign companies to obtain competitiveness in certain sectors. US insurance companies are particularly limited to 50% ownership in China. The presence of foreign banks is also being controlled by the Chinese Government. As for the automobile industry, foreign companies are required to enter a joint venture with a Chinese company before they allow automobile assembly operations in China. US Credit card operators (Mastercard and Visa) are still in the process of getting independent licenses to operate in China. This has allowed China UnionPay to snatch the top spot in the credit card operation business.

Though Chinese citizens patronize American products such as Apple, Nike, and Starbucks, the regulation seems to be perceived as lopsided in favor of China. There is obviously the issue of balancing the agreement equation for a win-win situation. The current state of the agreement must have urged US President Trump to have strong feelings to push for reciprocity, and though accompanied by its own setbacks, it’s essence remains clear. As such, the challenge lies in maintaining good diplomatic affairs with China whilst finding the balance in the bilateral trade agreement, mostly by giving substantial and reasonable rewards to China when they adjust their policies for the US Businesses.