University of California Institute on Global Conflict and Cooperation

The Trump administration has prioritized economic policy—particularly trade with China. This emphasis is appropriate, given the extraordinary relative gains China has made in recent decades and the gigantic bilateral trade imbalance it has with the United States. Trade binds the two nations together. To some extent the imbalance reflects their complementarity, butit has also introduced unhealthy asymmetric financial dependencies. More fundamentally, it has enabled a steady transfer of knowledge that has allowedChina to substantially close the technology gap with the United States. Despite remaining much poorer overall, China is mobilizing its vast savings towards strategic projects. In some areas, it is now a near-peer rival. Advanced manufacturing is becoming a new theatre of superpower competition.