“Symbiosis” of China-U.S. economyMar. 7,2014
“Chimerica” is a newly-created word. We can easily tell that it’s a combination of China and America. Since the “symbiosis” economic model between China and the U.S. has been developing harmoniously, the economists affectionately call this economic entity “Chimerica.”The fast development and global influence of China-U.S. economic relations since China’s entry into the WTO have deepened the interdependence between the export-oriented economic development pattern of China and the over-consumption model of U.S. The U.S. has led the global industrial structure upgrading and industrial transfer since 1970s. Over the course, it transferred some of its manufacturing industry to Japan, then to east Asian new economies, and eventually to China. In this process, China has, to adopt the export-oriented strategy, brought in direct investment and capital goods from Japan and east Asian new economies, completed the processing and assembly and then exported the final products back to the U.S., thus forming the “trading cycle” in China-U.S. trade-capital dual cycle.
However, the fast development of China-U.S. trading cycle has also caused trade imbalance. It is reflected in the asymmetry of their trade interdependence. China’s export to the U.S. accounts for 4%-7% of China’s GDP which is relatively high, while the ratio of U.S. economic dependence on China is less than 0.9% which is rather low. Essentially China’s trade dependence on the U.S. is its dependence on the dollar standard system, explaining why the Chinese monetary authorities choose to implement peg-to-the-dollar policy in the long term.
Such financial interdependence between China and the U.S. is essentially an asymmetrical interdependence. This asymmetrical pattern has become a “symbiosis” model between the U.S. and China. The economic interdependences between the U.S. and China have constituted a two-way deterrence and balancing power. To secure their own state interests both sides are not willingly or unable to change this inter-relations.