IMPACT OF US SANCTIONS ON BILATERAL FDI WITH CHINA

Abstract

To explore the true causes, the paper is divided into seven parts of developing the research: the first part is

introduction, the second is the literature review, the third is a bi-variables empirical analysis; in the fourth we find out the true cause of trade deficit from the angle of goods trade by classification, comparative analysis of statistical discrepancies in the two countries are developed in the fifth part and the sixth multi-variables empirical analyses on the trade deficit as well as the conclusion and policy suggestions presented in the seventh part. To explore the true causes, the paper is divided into seven parts of developing the research: the first part is introduction, the second is the literature review, the third is a bi-variables empirical analysis; in the fourth we find out the true cause of trade deficit from the angle of goods trade by classification, comparative analysis of statistical discrepancies in the two countries are developed in the fifth part and the sixth multi-variables empirical analyses on the trade deficit as well as the conclusion and policy suggestions presented in the seventh part.

The American government levied the United States (U.S.) humanitarian, export, import, investment, and technology transfer sanctions on China in 1989, and it has been happening for many years, and the collateral damages or trade imbalance with high deficits in the US-China partnership on trade has now grown out into conflicts in trade. In this paper, we are examining the economic impacts of American sanctions on the America and China in the last twenty years. The author finds that these impacts have moved and changed significantly over the years. The growth in China’s trade has been reduced by the application of economic sanctions from the U.S. in a new way that focuses not on its labor-intensive production segment but also on its high-end technological exports, which constitute a large portion of trade in the last ten years. U.S. sanctions have also caught the attention of investors and businesses planning to set up production facilities in China. The increased use of economic sanctions on trade by America with China has caused repercussions on American consumers and businesses. The increase in price in the domestic market affected the consumers, whereas firms and corporations now had to outsource at a higher cost since sanctions on China have driven those costs high. The sanctions of the U.S. on China not only affect just China and the U.S. but also impact all those countries involved in trade with China and U.S., either directly or indirectly. U.S. has also now targeted Hong Kong, which acted as a middle man for the trade of most products restricted by the U.S. for trade to China since Hong Kong was considered a separate buyer, but now the U.S. recognizes that these purchases are done so that they can, in turn, be sold off to China evading sanctions. In short, the U.S. trade sanctions and embargoes on China have impacted U.S. and China along with other trading partners of the duo, although we see a decreasing negative impact of sanctions on China as they evolve and adapt to the sanctions environment.

Although global sanctions are considered a new regular form of convincing, their negative financial effects are yet to be fully understood. The results of sanctions of America on the growth and development of China, as well as the several methods used which sanctions influence financial and development activity are the topic of our study. We highlight that foreign sanctions can adversely affect growth domestic product growth and its functions (purchase, investment, and national purchase), including international exchange and external direct investment.

In order to create the study, I am partitioning the research into six parts: the first section is an introduction, with a light exposure of the topic & a brief of the FDI movement from the U.S. to China and China to U.S with a focus on the topic in the appearance of subheadings like 'Literature Review of FDI & ‘Importance of learning this topic in modern times, the next section is 'US-China Investment Ties,' followed by 'Important Sanctions of U.S. to China since 1989', then 'Causes of Sanctions on China,' and finally 'Effects of Sanctions On FDI In China,' with conclusion and suggestions presented in the second last and final part.