Global production sharing and US-China trade relations

Abstract

This paper examines US-China trade relations, focusing on the ongoing process of global production sharing global production sharing"??the breakup of the production processes into geographically separated stag"and the resulting trade complementarities between the two countries in world manufacturing trade. The results suggest that the USChina trade imbalance is basically a structural phenomenon resulting from the pivotal role played by China as the final assembly centre in East-Asia centered global production networks. Given the current state of China's factor market conditions, US-China trade patterns are unlikely to change dramatically in the short to medium run.