Global Production Sharing and US-China Trade Relations

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.