Volution of Sino–US Bilateral Economic Relations under Trade Frictions

Abstract

This paper analyzes the evolution of China–US economic relations from complementarity to competition, with a primary focus on the 2017-2023 trade friction period. Methodologically, it combines a targeted literature synthesis with descriptive evidence on the pre-friction trade landscape (2002-2016) and a multi-indicator framework spanning 2007–2023. At the macro level, a four-dimension competitiveness system—GCSI, GCWI, GCOI, and GCTI—captures shifts in strengths, weaknesses, opportunities, and threats. At the industry level, three sectors—high-tech manufacturing (HTM), strategic resource industries (SRI), and modern services (MSI)—are evaluated via the Import Input Dependency Index (IIDI) and the Industrial Position Transfer Index (IPTI) to track dependence and positional dynamics in global value chains (GVCs). Results indicate a clear turning point in 2018–2020: China's competitiveness strengthened (higher GCSI, higher GCOI, lower GCWI) alongside rising external threats (higher GCTI), while the US remained relatively stable with marginal declines and elevated threat signals. The US exhibits consistently higher IIDI across all sectors—especially a pronounced rise in MSI—whereas China's HTM/MSI dependence declined and then stabilized. IPTI points to greater US dynamism in GVC repositioning and greater stability for China. Consistent with prior research, tariff shocks transmit through price pass-through, general-equilibrium reallocations, and GVC linkages, reducing welfare and straining exposed local labor markets, while catalyzing regionalization, diversification and nearshoring.