The U.S. also accuses China of unfair trading practices and cyber theft of business secrets. Tough action by either side could spark a skirmish at sea or a trade war that would make many goods in the U.S. more expensive.
WHERE THEY STAND
Hillary Clinton says the U.S. needs to “stand up to China” and press the rising Asian power to play by international rules — in trade, in cyberspace, and in territorial disputes. But she’s also said the two nations need to cooperate where they can. Donald Trump says the high volume of U.S.-China trade gives Washington leverage over Beijing. He accuses China of undervaluing its currency to makes its exports artificially cheap and he proposes tariffs as high as 45 percent tariff on Chinese imports into the U.S. to force it to trade fairly and support other U.S. policy goals.
WHY IT MATTERS
The U.S. and China are the world’s two largest economies and biggest military spenders. The wider world needs them to get along, to keep the peace and tackle global problems like climate change and a nuclear North Korea. The U.S. and China also depend on each other economically. Two-way trade topped $600 billion in 2015. China is the largest foreign holder of U.S. debt, and by some estimates, Chinese foreign direct investment into the U.S. has started to outstrip the flow of U.S. investment into China.
President Xi Jinping is trying to manage a soft landing for a slowing economy, and boost domestic consumption to reduce China’s reliance on foreign trade to drive growth. That goal is supported by Washington as it could help reduce the U.S. trade deficit with China, which hit a record of nearly $370 billion last year. But China has a mixed record on economic reform. It has allowed market forces to play a bigger role in its currency exchange rate, but the U.S. has other complaints: restrictions on market access for foreign companies, economic espionage, and state subsidies, including cheap imports from China’s bloated steel industry.
China is building Asia’s strongest military and wants to be treated as a global leader, but its assertive behavior has unnerved its neighbors who look to the U.S. to help preserve order.
The U.S. worries that China, which has built several artificial islands in the South China Sea, wants to control crucial sea lanes. China denies this but refuses to compromise in what it says is a historical right to tiny islands and adjacent waters in the South China Sea where five other governments have territorial claims.
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