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14 U.S. Bureau of Economic Analysis. “International Trade in Goods and Services.” - and-services. 15 In market exchange rate terms. 16 Wright, Logan and Daniel Rosen. “Credit and Credibility: Risks to China’s Economic Resilience.” CSIS Freeman Chain in China Studies . October 2018: 127. 17 “Global 2000:The Worlds’ Largest Public Companies.” Forbes , June 6, 2018. . 18 Deputy Secretary of State Robert Zoellick’s keynote address to the National Committee on US-China Relations, Sept 21, 2005. 19 White House. “United States National Security Strategy.” December 2017. - Final-12-18-2017-0905.pdf. 20 Ibid. Assessing the U.S.-China relationship: Benefits and costs of the world’s largest economic relationship Since China’s accession to the WTO in 2001, U.S. trade with China has increased from $125 billion to over $700 billion in 2017. 14 In this same period, China’s economy has quadrupled in size, from the fourth largest economy in 2001 to the world’s second largest today. 15 China accounts for 16 percent of global activity and 40-50 percent of global marginal growth. 16 In addition, the world’s largest middle class now lives in China, and four of the world’s top 10 banks are Chinese, including the first and second largest banks. 17 China also has the largest e-commerce market. Over this period, the U.S. has supported China’s global integration with the expectation that as China benefited from the international economic system, including WTO membership, it would become a responsible stakeholder—where China would work with the United States “to sustain the international system that has enabled its success.” 18 However, this U.S. view of China has progressively evolved into seeing China less as a partner and more as a competitor, culminating in the positions taken by the Trump administration. The trade and investment front is where some of the most dramatic shifts in U.S. policy towards Chi- na have manifested. For instance, the U.S. 2017 National Security Strategy states that “China and Russia challenge American power, influence, and interests, attempting to erode American security and prosperity. They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence.” 19 The same National Security Strategy called for the U.S. to rethink the policies over the past two decades, “policies based on the assumption that engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners. For the most part, this premise turned out to be false.” 20 In order to decide what type of trade and investment relations the U.S. and China should have going forward, it is important to step back and be clear about the current state of the bilateral economic relationship.
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The US-China economic relationship: A comprehensive approach 8
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