The Effectiveness of U.S. Economic Policies Regarding China Pursued from 2017 to 2024

Keith Crane, Timothy R. Heath, Alexandra Stark & Cindy Zheng

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Introduction

After China began its economic reforms in 1979, the United States pursued policies designed to bring China into international institutions governing trade and foreign investment. In the following decades, U.S.-China trade relations expanded rapidly. By the 2000s, China became the largest source of U.S. imports and one of the United States’ top four trading partners, along with Canada, the European Union (EU), and Mexico. The surge in trade and investment often contributed to contentious economic relations. In the 1990s and early 2000s, the United States imposed tariffs on Chinese subsidized exports that supplanted U.S. production, criticized Beijing for placing restrictions on the activities of U.S. companies that wished to invest in China, and denounced China’s theft of U.S. intellectual property. China, for its part, complained about U.S. controls on exports of technologies, constraints on imports from China, and efforts to curb purchases of Chinese products and technologies on the part of U.S. friends and allies.

U.S. Presidents Donald Trump and Joe Biden have adopted considerably more-restrictive policies concerning trade, investment, and technology flows between the two countries than their predecessors. Regarding China as a formidable economic competitor, the United States has passed laws, such as the Inflation Reduction Act,2 designed to support research and development (R&D) and increase investment and domestic production in key industries, including some in which China is dominant or threatens to become so. Increases in tariffs on Chinese goods have been adopted to “de-risk” U.S. supply chains by encouraging U.S. businesses to diversify their sources of supply away from China.3 Other policies have aimed to curtail Chinese efforts to coerce neighboring countries through economic punishments. Still others have sought to restrict China’s access to technologies that could enhance the capabilities of its military.