Use of Tariffs and Restrictions When Dealing With China and Trade Imbalance with the U.S

Use of Tariffs and Restrictions When Dealing With China and Trade Imbalance with the U.S
Name
Institution
Date
Use of tariffs and restrictions when dealing with China and trade imbalance with the U.S
Introduction
China has been a potential foreign market after the great recession of 2008-2009. Despite being the fourth largest US trading partner, many U.S. industries continue to face significant non-tariff trade barriers in China. In 1991, the Bush administration initiated a section 301 case to the World Trade Organization against unfair trading practices affecting U.S. exports. Congress insists that the US should impose tariffs and restrictions to solve the strained trade relation and the recurrent trade imbalance between China and the US. Not all legislators are in agreement with this decision; instead, those opposed to the decision argue that there are many other factors related to macroeconomic, exchange rate, financial policies, and structural issues that have also contributed to the imbalances. This paper examines some of the arguments presented to support and oppose the move to use tariffs and restrictions when dealing with China and trade imbalance with the U.S. This paper also presents varied views concerning policy and their reasons for blaming China of unfair trade practices, which has created an uneven playing field for the US companies when competing with imports from China (U.S. & Foreign Commercial Service, 2012).
Why the US prefer doing business in China
China is among the few countries who responded quickly to the global economic downturn of 2008. In 2009, China's GDP grew to 9.2 percent due to the combination of monetary and bank lending measures it established (Flannery, 2013). Congress has viewed China as a country with a steady economic growth. According to the latest economic review, approximately 20 percent of global luxury goods are consumed by China, and 80 percent of people buying these goods are the young people (U.S. & Foreign Commercial Service, 2012). This makes China a potential foreign market whereby large multinational companies have continued earning impressive returns on export and investment, therefore imposing tariffs and restrictions when dealing with China and trade imbalance will affect US exports to China (U.S. & Foreign Commercial Service, 2012).
Despite the remarkable growth, business analyst argues that China is a developing country with a significant economic division that exists between the urban and rural areas. The country’s economy is unpredictable due to the legal and regulatory systems that are considered to be inconsistent. In addition, business experts argue that the Chinese market lacks effective protection of intellectual property rights, which has affected many American companies. That is why in 2009, the US initiated the case against China challenging export quotas and other restraints the country has maintained on export .Furthermore the government bureaucracy protects local firms especially state-owned enterprises from importer while encouraging exports (Knight & Wang, 2011).
Contrary to the views of legislatures ,during the 107th congress , others felt that there is no need for closely monitoring China’s compliance wi...