© 2020, Farok J. Contractor, Distinguished Professor, Rutgers Business School, and President-Elect, Academy of International Business
Introduction to a public lecture sponsored by the Academy of International Business and the University of Nottingham (China, Ningbo Campus)
Talk approximately 60 minutes followed by Q&A of 30 minutes
Just two countries, China and the US, comprise 40 percent of the world’s GDP and 23 percent of its population, making their bilateral commercial relationship by far the most important on the planet — and the strain between them especially unfortunate.
Measuring the Two Countries’ Interdependence
Much of my talk is focused on estimates of the two nations’ mutual dependence in terms of the numbers of jobs and the money flows involved in the US-China relationship. But I also discuss related issues, such as the competitiveness of manufacturing, the value of the renminbi yuan (RMB), and the dangers of overplaying the nationalism and protectionism cards.
I address the following questions and concerns:
• What’s at stake in the unnecessary US-China spat?
• How many jobs in the US and China depend on trade with each other? (I provide some estimates)
• How many jobs in the US and China depend on FDI in each other’s countries? (I provide some estimates)
• How dependent is the US consumer on Chinese products?
• Can we bring jobs back to the US? Realistically, how much reshoring can happen?
• Is US manufacturing really in decline? Think again.
• What is the role of global manufacturing?
• Is the RMB undervalued?
• Dollar surplus recycling by China into US treasury bonds and other US assets
• Cybersecurity threats
• Dumping? What’s going on?
Conclusions — I Address These Questions:
• Can the US and China compete and also cooperate?
• What are the mutual benefits? And what’s at risk with more decoupling?
• What are the dangers of overdoing paranoia and nationalism?