Question

Should the US do business with China? why or why not/justify

Answer 1

I think the US should do business with China.

Firstly, this is a globalized economy and China is the second largest economy in the world. In addition, China is the biggest trading partner of the USA. Therefore, not doing business with China is not at all an option for the US in the increasingly globalized world.

Secondly, China is the cheap manufacturing destination of the world because of cheap labor. Cheap imports of labor-intensive goods from China helps the US concentrate on capital-intensive goods. This creates a win-win situation for both the countries. US consumers benefit from the cheap Chinese imports. Also, the capital-intensive industries gain higher competitiveness.

Thirdly, China is the biggest foreign creditor of the USA. Therefore, not doing business with China will mean a significant credit crisis for the USA.

Fourthly, China is a huge market for the US firms like Apple. Not doing business with China will hurt these companies badly.

Fifthly, any protectionist trade policy with China will result in retaliation by China with similar policies. This will hurt the American exporters who export goods to China. Also, many American firms would find it increasingly difficult to do business in China.