The US and China prefer leadership over economic efficiency – Natixis

The US-China relationship was severed in 2014, despite the cost of doing so in terms of economic efficiency, economists at Natixis report.

Key quotes

“From the 1990s to 2013, the US and China formed a mutually beneficial relationship: the United States had a significant trade deficit with China, which China financed by buying US Treasuries.” 

“China became a threat to the United States’ technological leadership since China’s role as a production hub naturally led it to produce sophisticated goods to meet demand.”

“The US severed this relationship to preserve its leadership, which has come at an economic cost since the previous arrangement was efficient for both countries: a shift has taken place from a logic of economic efficiency to one of preserving a dominant position.”