The U.S.-China Economic Relationship: Separating Facts from Myths

Many myths surround the economic relationship between the United States and China. Four, in particular, stand out, and it is important to identify them as myths to avoid misunderstandings that could adversely influence policy decisions. The fact that China has become the largest foreign holder of U.S. government securities is taken as indicating that the United States is heavily dependent on China to finance its budget deficits. Similarly, since China is a major source for U.S. imports, U.S. consumers are seen as dependent on cheap Chinese goods. In addition, the Chinese authorities have emphasized that they strongly resist external pressures to try to influence policy decisions and that economic instability in China is bad, with adverse implications for the rest of the world.

Steven Dunaway, Council on Foreign Relations, 16-Nov-2009