US-China Economic Relations: Which Path to Take?

How should the United States respond to mounting tension over its trade relations with China?

Zhigang Tao, Shang-Jin Wei, Erik Tollefson  | Spring 2019
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Nearly 20 years after China’s accession to the WTO, US-China economic relations had reached an inflection point as the bilateral diplomacy between a global superpower and a rising developing country had developed into one increasingly between equals. Set in 2018, this case explores the issues that led to mounting economic tensions between the United States and China, including a structural trade deficit with China, a decreasing percentage of US workers in the manufacturing industry, US companies underperforming in China due to competitive advantages, and a potentially undervalued Chinese yuan.

This case provides political and economic context for the current situation, asking students to consider how the US government should act going forward: using global institutions, leveraging bilateral diplomatic channels, changing domestic economic policies, or all three.

Case ID: 200301

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