China's Economic Relations

China's economic relations crucially depend on bilateral trade with the other nations of the world. The economic relations of China have undergone substantial changes since it has joined the World Trade Organization in the year 2001. As an aftermath of the WTO agreements, the Chinese government has followed the open trade policy.
The free trading system has further expanded the economic relations of China with its trade partners, uninterrupted by all types of trade barriers. This transition of Chinese economy to an open market-oriented economy has been highly beneficial for the all-round growth of China.

China's Economic Relations with the US
China's economic relation with US has expanded significantly with China joining the World Trade Organization in the year of 2001. Over the years China has emerged as the most potential market for American exports. US goods export to China amounted to $41.8 billion in 2005. This figure was 20% more than the corresponding figure in the year 2004.

When it comes to US farm exports, China happens to be the fourth biggest export market of US; the other three markets being Canada, Japan, and Mexico. During the period from 2001 to 2005, Chinese exports to US have also increased substantially. In monetary terms, the volume of exports from China to US has increased from worth 102 billion US dollars to 243.5 billion US dollars.
China's economic relations with US took a different turn in 2005, with America acquiring around 23% of the good exports from China. This bilateral trade involved a trade deficit amounting to US $201.6 billion with China, the highest ever trade deficit seen in bilateral trade. There are different factors that resulted in this trade deficit. Some of the major factors are as follows:
•The US demand for Chinese goods exports was much higher than the amount that was exported from China.
•Restrictions imposed on US prevented the American traders to get into some crucial sectors of the Chinese economy.
•The China-US trade deficit is considered as a part of the US trade deficit with East Asia. As the trade deficit with Asia has continued to remain the same over the last decade, the trade deficit with China only added to this problem.
To improve the economic relation between China and America, the US government has adopted different policies from time to time. The primary objective of all these policies is to push the Chinese government towards implementing a more liberalized economic structure. This is turn facilitates the process of correcting the imbalances of the Chinese economy. The US government is working with the reformers and political leaders of China to promote bilateral trade between the two countries. The US government is also trying to ensure China's compliance with the commitments of the World Trade Organization.

The US direct investments in China constitute an important part of China's economic relations with US. The Chinese petrochemical sector, manufacturing sector, and hospitality industry are some of the preferred areas of investment by the US investors. More than 100 multinational corporations based in the United States are having their operations in China. US cultivated investment in China has been more than $54 billions.All these act as positive catalysts in facilitating China's economic relations with US.