The United States and China have several unresolved issues regarding bilateral trade between the two countries. The trade deficit between China and the United States increased significantly, with the volume of imports from China growing much faster than U.S. exports to China. This large trade deficit has been a problem for both economists and policy makers. Some argue that it is an indicator of China`s unfair trade practices, while others attribute the imbalance to the strength of the Chinese economy and production systems heavily influenced by state intervention. The Trump administration has put in place several customs measures to reduce the trade imbalance. China`s monetary policy has been another hot topic, as China has deliberately kept its currency undervalued for years. However, China has moved towards a more market-based exchange rate, but China`s monetary policy is still under close scrutiny. Other issues affecting bilateral trade flows include China`s industrial policy, which favours state-owned enterprises, differences of opinion on China`s WTO obligations, and the lack of protection of U.S. intellectual property rights. Trump said Wednesday`s agreement was a “phase one” agreement and promised that the government would address other issues, such as China`s government subsidies, in future negotiations.
China expressed its readiness to implement the TRIPS agreement after accession, to eliminate and terminate the application of trade and currency equalization requirements, to eliminate and enforce local content requirements, to refuse to enforce the contracts that impose these requirements; to impose or enforce laws or other provisions relating to the transfer of technology or other know-how only if they comply with WTO agreements on the protection of intellectual property rights and trade-related investment measures. The People`s Republic of China and the United States resumed trade relations in 1972 and 1973. U.S. direct investment in mainland China covers a wide range of production sectors, several major hotel projects, restaurant chains and petrochemicals. U.S. companies have entered into agreements for more than 20,000 joint ventures, joint ventures and all-foreign companies in mainland China. More than 100 U.S.-based multinationals have projects in mainland China, some with multiple investments. Cumulative U.S. investment in mainland China is estimated at $48 billion. The U.S. trade deficit with mainland China exceeded $350 billion in 2006 and was the largest bilateral trade deficit in the United States.  Among the factors affecting the U.S.
trade deficit with mainland China, it is likely that China`s accession to the WTO will not reduce the bilateral trade deficit or eliminate trade disputes with the United States for a number of reasons. First, the benefits of China`s accession may have been oversold by a government that is asking an authority to extend permanent normal trade relations to China to prevent China from being excluded from the benefits of WTO obligations. Although the bilateral agreement between China and the United States, which will be part of China`s multilateral commitments, offers greater market opening, Chinese product markets are on average much more open than others. For example, in early 2001, China`s average tariff was lowered to 15.3%, about half that of India and roughly that of Brazil and Mexico. In addition, 60% of all imports arrive in China as part of one of the many import tax exemption programs. As a result, the actual customs surveys in China are very modest – less than 5% of the value of imports. Chinese Vice Premier Liu He, who signed the agreement on behalf of China, said the agreement was rooted in “equality and mutual respect