The Economic and non-Economic Analysis of U.S.-China Trade Deficits

While the bilateral trade volume between China and U.S. has been growing rapidly, the trade deficits of U.S. to China has also been expanding. This growing trade deficit of U.S. to China has several reasons: the increase of foreign direct investment to China, the transfer of trade deficit origins, the intervention of U.S. domestic politics to China-U.S. trade relations, and U.S. direct control on export to China. However, the increased U.S. trade deficit to China does not mean that U.S. is in a disadvantaged position in its economic relations with China, or its international competitiveness is deteriorating. When U.S. surplus in service trade to China is included, the picture would be very different. Also, as internationalization progresses and China's industrial structure adjusts, the trade deficit of U.S. to China would narrow.