Summary:Despite the fear factor associated with the rapid growth of China, global trade throughout the past century has been and will continue to be good for the United States economy. Throughout the history of trade, the United States has consistently benefited from economic convergence and interdependence with other national markets. While it may be argued that there is no historical precedent for the rapid growth of an economy as large as China′s, careful U.S. policy designed to mitigate current trade implications will enable the United States to continue to reap the benefits of a free, global trading system.
According to Diana Farrell, "U.S. movement toward protectionist policies will decrease American competitiveness and thus lead to a decrease in America′s comparative advantage."
In addition to developing free trade policies, panelists suggest that rather than look to protectionist trade barriers, or intervention of foreign markets, the United States should focus on its own internal structures to determine ways to increase its comparative advantage. In particular, panelists agreed the U.S. would command a much stronger position within the expanding global market were it to invest in its own infrastructure, such as improving its education system and altering its immigration standards in order to retain foreign born, but U.S. educated, individuals to contribute to American innovation.
Looking to the external effects on the American economy from strong foreign markets, panelists suggest the rapid growth of China is actually positive for the United States. "A really dangerous world would be a failing China" said Clyde Prestowitz. Additionally, all panelists agreed that China′s ascension to the WTO was a positive step for global economics.
Despite the positive effect of China′s growth on the United States, interdependency inevitably does present some external risks to the U.S. economy, such as the large trade deficit the United States maintains with China. Of particular concern, is the effect of such a large deficit on the geo-political positioning of the United States.
Charlene Barshefsky noted that "it′s troubling that over half of worldwide dollar reserves are held by only four Asian countries." Panelists suggested both the whittling down of the national deficit and a refocusing of Congress′ attention from regional trade agreements such as NAFTA and CAFTA to the growing Asian economies to the East.
Yet, despite the inherent risks of global trade, panelists agree that a world with free trade will produce more economic well-being than the converse. According to Diana Farrell, "we should embrace and manage the challenges of free trade."
