Free Report Example on Exploring Global Trade: USA-China Relations & Brexit's Impact on EU

Report Topic 1: China and USA Trade Relations

The last two decades have witnessed the trade between China and the USA expand significantly. It is evidenced through research that showed by 2018, China was the USA's largest goods trading partner, with total trade worth over $660 billion (USTR, 2019). Notably, the trade between the two economic giants' supports many professions in both the USA and China through various businesses. On the other hand, the Chinese are a great consumer of American luxury goods. With the surging Chinese middle class, the USA faces a significant opportunity to tap into a new and lucrative consumer base. As such, this section will explore economic trends between the USA and China, exploring different aspects of their trade over the last 20 years.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Total Exports and Imports

The Chinese are the United States' largest goods trading partners (Li, He, and Lin, 2018, p.319). Over the years, the USA exports less to China than it imports. In 2018 the USA exported goods worth over $120.3 billion, while the imports to China stood at $539.5 billion (USTR, 2019). As such, the USA and China trade deficit was almost $420 billion. The trade-in services were estimated to total to $77.3 billion (USTR, 2019). The services exported to China totaled $58.9 billion, whereas the services imported were $18.4 billion (USTR, 2019). The United States has been recording a service trade excess; in 2018, it was recorded at $40.5 billion (USTR, 2019).

The Commerce Department has identified that the trade between China and the USA supports nearly 2.6 million American jobs (USTR, 2019). The created employment continuously keeps rising as American goods' demand keeps growing among the Chinese population (Li et al., 2018, 319). In 2018 exports to China accounted for 7.2% of all exports by the United States (USTR, 2019). Comparatively, the United States was China's third-largest export market, as the Chinese have transformed into an industrial and manufacturing nation that exports to many parts of the world (USTR, 2019). Considering all imports into the United States, China was America’s chief seller of merchandise, with the total goods imported from China totaling $540 billion.

Financial Flows (FDI)

The past two decades have witnessed the gradual slowing of foreign direct investment (FDI) flows between China and the United States. For instance, China's FDI into the USA moved from $45.8 billion in 2016 to $29.4 billion in 2017, and further plunging to $4.8 billion in 2018. Nonetheless, China continues to sustain its interests in the USA’s biotechnology, health, and technological sectors (USTR, 2019).

Total Trade Percentages (Exports, Imports, and FDI) between China and the USA.

USA imports from the Chinese have been on the rise; currently, it accounts for 21.2% of the USA imports.

USA’s exports to China make 7.2% of total exports by the USA, which is also the third-largest export by the USA (USTR, 2019).

USA’s FDI in China was 107.6 billion in 2018, 10.6% from 2017.

China’s FDI in the USA was $39.5 billion in 2018, a 2.3% drop from 2017 (USTR, 2019).

Top 5 Exports and Imports from China to the USA and vice versa

Top Imports from China to the USA include; Electronic devices ($152 billion), apparatus $117 billion, fittings $35 billion, toy and sporting gear $27 billion, and Plastics $19 billion (USTR, 2019). Products have changed over the past 20 years owing to technological development and the cost of production. The cost of production in the USA is significantly high, an aspect that has prompted a surge in imports.

The top exports from the USA to China entail aircraft worth $18 billion, equipment $14 billion, electrical equipment $13 billion, medical apparatuses 9.8 billion, vehicles 9.4 billion, and agriculture $9.3 billion (USTR, 2019). The USA also transfers services worth over $58.9 billion to China (USTR, 2019). Exports to China from the USA have transformed in the last 20 years as the Chinese focus on importing luxury goods and highly trained expatriates from the United States (USTR, 2019, 1).

Conclusion

It is evident from the analysis that the U.S.-Chinese trade has expanded over the last 20 years. The trade relation has fostered China to be the USA’s largest goods trading partner. China forms the third-largest USA export market. The USA-Chinese trade also creates and supports various businesses that provide employment. Exports and imports between China and the USA have changed over the past decades. It resulted from significant technological developments and differing costs of production among the nations. The USA enjoys China’s low production costs while American luxury products export to the significantly growing Chinese market.

Report Topic 2: Trade Relationships between the European Union (EU) and the United Kingdom

Brexit refers to Britain’s exit from the European Union. The exit process has been an ongoing process since 2016 when the British people decided the benefits of being part of the unified financial entity no longer balance the costs of the free movement of immigration. Having decided to vote, a majority of the Britons chose to exit the European Union. Following Brexit, immediate changes to be realized include imposing tariffs on goods getting into the UK, among other trade restrictions and migration restrictions. As such, the International Monitory Fund (IMF) has concerns about the effects Brexit will have in this region. This essay analyzes and assesses the UK, Brexit, and its impact on the EU economy.

The UK Economy

The UK's economic liberty mark is 79.3, an aspect that brands its economy the 7th unrestricted in the 2020 index. The general score was amplified by 0.4 points due to increased government reliability and financial health (Economic Freedom, 2020). The UK's economy has gradually been on the rise in the most liberal ranks during the last decade. The state has documented substantial GDP progression in the last five years but slowed in 2018 due to Brexit's confusion. Despite the disruption, the government has since settled down and had numerous opportunities to expand its economic freedom. With a 66.5 million population, the UK's GDP statistics show $3.0 trillion with a growth rate of 1.4% and a 2.1% 5-year multiple yearly growth (Economic Freedom, 2020). The country's unemployment rate is at 4.0%, inflation at 2.5%, and the FDI inflow stands at $64.5 billion (Economic Freedom, 2020).

Importance of the UK Economy for the EU Economy

The UK was trading with almost every European Union member state, whereby it shares a meaningful average of 2.2% with the 27 EU states (Economic Freedom, 2020). EU's service export share to the UK was at an average of 0.5%. Likewise, the UK only exported an average of 0.6% service share to EU nations (Economic Freedom, 2020). Exports to the EU make up about 12% of the UK's GDP, and about 45% of its exports (Economic Freedom, 2020). However, reaching trade agreements for future relationships will protect the UK and the EU and limit further GDP losses for both the UK and EU states. Countries that might get adversely affected and are close to Britain include Ireland, the Netherlands, and Belgium. The larger economies of Germany, France, Italy, and Spain are less likely to get affected because they trade less with the UK.

Effects of Brexit

The EU has been the UK's leading trade partner. As such, the UK's financial sector has been beneficial for accessing the single market (Felbermayr, Fuest, Gröschl, and Stöhlker, 2017). Following Brexit, negating a new business arrangement with the EU is going to be complicated. Trade between the UK and the EU is likely to get expensive. With Brexit, there will be extra administrative costs related to customs following the trade between the UK and the EU. Increased compliance costs on origin and conformity rules will likely divert business away from the EU. UK exporters will be adversely affected by the imposed tariff. The tariffs will increase the price of exports as their goods will get more expensive across EU states. Likewise, the British government's imposed regulations will deter trade with the remaining EU states (Felbermayr et al., 2017).

Conclusion

Brexit entails the process of the UK exiting the European Union. It resulted from Britain deciding that the benefits associated with being an EU member state do not balance with gains from free immigration and movement. Brexit will result in some adverse economic changes, such as imposed tariffs on goods imported to the UK, trade, and migration restrictions. The UK was an influential EU member state since it traded with almost all its member nations. EU member countries neighboring the UK are likely to be more adversely affected compared to others. Despite having enjoyed steady GDP growth and low unemployment rates, the UK will potentially suffer a GDP drop after Brexit. At the same time, its natives might get barred from accessing opportunities in the remaining EU states.

References

Economic Freedom, 2020. 2020 Index of Economic Freedom. The United Kingdom. Economic Freedom. https://www.heritage.org/index/country/unitedkingdom.

Felbermayr, G., Fuest, C., Gröschl, J.K. and Stöhlker, D., 2017. Economic effects of Brexit on the European economy (No. 04). EconPol Policy Report. https://www.econstor.eu/handle/10419/219507

Li, C., He, C. and Lin, C., 2018. Economic impacts of the possible China-US tradewar. Emerging Markets Finance and Trade, 54(7), pp.1557-1577. https://www.tandfonline.com/doi/abs/10.1080/1540496X.2018.1446131

The Office of the United States Trade Representative (USTR) (2019). The People's Republic of China. https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china.