ECONOMIC RESEARCH TEAM

U.S.A

1. Historical Background in economy of the United States to China/India

a. Historical Background of U.S.A

● 1949: Establishment of the People’s Republic of China; U.S.A. severs ties
with the communist government in Beijing.
● 1979: U.S. and China normalize relations; China aims to boost trade and
investment.
● 1986: China applies to rejoin the General Agreement on Tariffs and Trade
(GATT).
● 2001: China joins the WTO, ensuring “permanent normal trade relations.”
● Trade surge: U.S. goods imports from China increase from $100 billion in
2001 to over $400 billion in 2023.
● President Trump imposes heavy tariffs on Chinese goods.
● President Biden maintains tariffs and introduces new trade restrictions.

b. Historical Background of U.S.A and India

 ● 1961-63: Establishment of Indian Institutes of Technology (IITs) with
American collaboration.
● 1990s: Economic reforms in India begin to improve U.S.-India relations.
● 2000: President Clinton visits India, marking a thaw in relations.
● 2014: Prime Minister Narendra Modi visits the U.S., focusing on economic
and defense collaboration.

2. Goods or Services Where U.S.A is Leading

a. Identify key sectors where the U.S.A dominates globally (Exports)

● Mineral fuels including oil: US$323.2 billion (16% of total exports)
● Machinery including computers: $233 billion (11.5%)
● Electrical machinery, equipment: $200.7 billion (9.9%)
● Vehicles: $152.8 billion (7.6%)
● Aircraft, spacecraft: $124.9 billion (6.2%)
● Optical, technical, medical apparatus: $105.1 billion (5.2%)
● Gems, precious metals: $76.7 billion (3.8%)
● Pharmaceuticals: $90.3 billion (4.5%)
● Plastics, plastic articles: $77.8 billion (3.9%)
● Organic chemicals: $51.7 billion (2.6%)

3. U.S.A Economic Power

a. Analyze the overall economic strength and GDP.

● 28,783 Billion USD
b. Influence on global markets.
● Financial Markets: Wall Street, particularly the New York Stock Exchange
(NYSE) and NASDAQ, are major global financial hubs. The performance
of US stock markets often sets the tone for global investor sentiment and
can impact markets worldwide.
● Currency: The US dollar (USD) is the world's primary reserve currency
and is widely used in international trade and finance. Movements in the
USD exchange rate can affect trade balances, inflation rates, and financial
stability in other countries.

4. Trading Capabilities

a. Major trading partners.

5. Power of U.S.A to Apply Economic Sanctions

a. PPower of U.S.A to Apply economic sanctions to China

● Global Trade Influence: The U.S. is one of China's largest trading partners.
As such, U.S. sanctions can significantly disrupt Chinese exports, affecting
China's economic stability and growth.
● Control of Financial Systems: The U.S. dollar is the world's primary
reserve currency and is widely used in international trade and finance.
U.S. control over the global financial system, including major financial
institutions and transactions, allows it to impose restrictions that can limit
China's access to international financial markets.
● Alliances and Partnerships: The U.S. can coordinate with its allies to
impose multilateral sanctions, increasing their effectiveness. Countries in
Europe, Asia, and other regions often align with U.S. sanctions policies,
amplifying their impact on China.
b. ower of U.S.A to Apply economic sanctions to India
● Sanctions can disrupt Indian exports and affect economic stability.
 ● Control of Financial Systems: The U.S. dollar's role as the primary reserve
currency and its control over global financial institutions and transactions
can limit India's access to international financial markets.
● Sanctions can restrict Indian companies' ability to conduct transactions in
USD, affecting international trade and investment.
● Regulatory Influence: U.S. regulatory bodies like the Office of Foreign
Assets Control (OFAC) enforce sanctions, freezing assets and restricting
financial transactions.
● Alliances and Partnerships: The U.S. can coordinate with its allies to
impose multilateral sanctions, increasing their effectiveness.

China

1. Goods or Services Where China is Leading

a. Identify key sectors where China leads globally.

● China’s largest open pit coal mine at Antaibao in the Pingshou coalfield in
Shangxi Province and the best example may be Occidental Petroleum.
● Its operation in China has been profitable for more than a decade, and
Coca-Cola expects China to emerge as its largest Asian market in 2002 or
2003.
● China’s role in the technology and electronics industry is pivotal. It is a
global leader in producing integrated circuits and other electronic
components. Leading companies include Huawei, Xiaomi, and Lenovo.
● China’s automobile manufacturing industry is the largest in the world. It
has expanded from traditional automobiles to new energy vehicles (NEVs),
highlighting a shift towards more sustainable practices.
● Leading financial institutions such as the Industrial and Commercial Bank
of China (ICBC), China Construction Bank, and Ping An Insurance play
pivotal roles in domestic and international markets.
● The real estate sector is another critical component of China’s economy.
Major companies in this sector include China Vanke, Country Garden, and
Evergrande Group.

2. China Economic Power

a. Analyze the overall economic strength and GDP.

● 18, 536 USD Billion
● Since China began to open up and reform its economy in 1978, GDP
growth has averaged over 9 percent a year, and almost 800 million people
have lifted themselves out of poverty. There have also been significant
 improvements in access to health, education, and other services over the
same period.
● An estimated 17.2 percent of the population lived on less than $6.85 a day
(in 2017 PPP terms), the World Bank’s Upper-Middle-Income Country
(UMIC) poverty line, in 2023

b. China and U.S.A Trade Relationship

● The trade relationship between the PRC and the United States has been
long characterized by ongoing trade disputes. This includes the PRC’s use
of intellectual property (IP) theft, forced technology transfer, and myriad
market access issues that impede U.S. firms from operating on equal
footing with local PRC firms. The United States has responded with trade
policy actions including tariffs, sanctions, and export controls.
● In 2021, U.S. exports of goods and services to China were $188.3 billion,
up 13.9% from 2020, and imports from China were $527.6 billion, up
17.1% from 2020. As a result, the trade deficit with China increased to
$339.2 billion
● China’s growth of 5.2% in 2023 exceeded the previous year’s 3.0% but is
still considered lagging by historical standards. Based on the latest
indicators, it appears China’s GDP may be on a slower growth trajectory
than was the case for much of the last two decades.
c. China and India Trade Relationship
- Bilateral trade between India and China in FY23 stood at US$ 113.83
billion against US$ 115.83 billion in FY22.
- As of 2022-23, China was India’s third-largest trading partner.
 - Bilateral trade between India and China stood at US$ 136.26 billion in the
year 2022 and US$ 125.62 billion in 2021 with a growth of 8%.
- In the year 2020, India became the 16th largest trade partner of China.
- In FY23, China had a 13.8% share in India's total imports. India imported
goods worth US$ 715.9 billion from the world, including goods worth US$
98.5 billion from China.
- China occupies the 21st position in FDI equity inflows into India with a
cumulative FDI amount of US$ 2.50 billion from April 2000-Spetember
2023.

d. Influence on global markets.

 ● Investors with positions in overseas stocks may look for opportunities to
put money to work in China, the world’s second-largest economy (behind
the U.S.). China is still classified as an emerging market, but its equity
values represent, by far, the largest among all emerging market countries.

3. Trading Capabilities

a. Major trading partners.

● In 2021, exports to China accounted for 7.4% of total U.S. exports, and
imports from China accounted for 15.5% of total U.S. imports. Exports
were led by industrial supplies and materials, which accounted for 26.3%
 of U.S. exports to China, and imports were led by consumer goods except
food and automotive, which accounted for 48.2% of U.S. imports from
China.
b. Trade agreements and policies.
● The PRC has bilateral investment agreements with over 100 countries and
economies, including Austria, the Belgium-Luxembourg Economic Union,
Canada, France, Germany, Italy, Japan, South Korea, Spain, Thailand, and
the United Kingdom. China’s bilateral investment agreements cover
expropriation, arbitration, most-favored-nation treatment, and
repatriation of investment proceeds. They are generally regarded as
weaker than the investment treaties the United States seeks to negotiate.
● China maintains 17 Free Trade Agreements (FTAs) with its trade and
investment partners and is negotiating or implementing an additional
eight FTAs. China’s FTA partners are ASEAN, Singapore, Pakistan, New
Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, Maldives,
Mauritius, Georgia, South Korea, Australia, Cambodia, Hong Kong, and
Macao. In addition, in November 2020, China and 14 other countries
signed the Regional Comprehensive Economic Partnership. China
announced the ratification of the agreement in early 2021.

4. Power of China to Apply Economic Sanctions

a. Impact of sanctions on U.S.A

● Trade Relations: The trade relationship between China and the U.S.A is
significant, with the U.S.A importing $527.6 billion worth of goods from
China in 2021. Sanctions could disrupt this extensive trade network,
causing shortages and increased prices in the U.S.A, particularly for
consumer goods which make up 48.2% of imports from China.
● Financial Influence: China holds significant foreign reserves and U.S.
Treasury securities. Economic sanctions could lead to China leveraging
these holdings, potentially causing financial instability or increased
borrowing costs for the U.S.A.
● Investment Relations: With bilateral investment agreements with over 100
countries and 17 Free Trade Agreements (FTAs), China’s sanctions could
extend beyond direct U.S.-China relations, affecting U.S. investments and
operations in these partner countries.

India

1. Goods or Services Where India is Leading

a. Identify key sectors where India leads globally.

 ● India leads globally in exporting Textiles and Apparel, belonging to the
Top 3, wherein its Export Value is $37.11 Billion, they’re known to produce
high-quality cotton and garments

● India is also included in the countries who produce the most

pharmaceuticals in the World placing in Top 9 costing $44.56 Billion.
U.S.A was Top 1, and China was in Top 2. India has the highest number of
facilities out of all the countries and is best known for manufacturing
generic medicines.

2. India Economic Power

a. Analyze the overall economic strength and GDP.

● 3,942 USD Billion
b. Influence on global markets.
● India is considered to be the best in OffShoring, the practice of
transferring activities or ownership of a complete business to a different
country from a country to cut costs and increase its efficiency. Businesses
are sure to come to this country. India placed Top 1, followed by China,
and U.S.A placing Top 8 over the world.
3. Trading Capabilities

a. Major trading partners.

● China has surpassed the US to become India's biggest commercial partner,
with two-way trade totaling $188.4 billion in 2023–2024.
● In 2023–24, the US and India's bilateral trade was $118.28 billion.
Throughout 2021–2022 and 2022–2023 Washington was New Delhi's
principal commercial partner.
● U.S.A & China are both major trading partners for Market and Exports
consequently.
b. Trade agreements and policies.
● The United States and India do not have a trade agreement. In April 2018, the
United States began evaluating India's compliance with the General System of
Preferences (GSP) market access requirements. In March 2019, the US
suspended India's GSP designation, concluding that India no longer met the
necessary criteria. This suspension affected $5.6 billion worth of Indian exports
to the US, which lost their special tariff treatment, impacting industries such as
textiles, pharmaceuticals, agricultural goods, and automobile components.
Despite this, India and the US continue to discuss various trade-related issues.
● The Graph below includes the Trade Agreement of India and China including the
mentioned countries below. India has signed and implemented these bilateral
and regional agreements
4. Power of India to Apply Economic Sanctions

a. Power of India to Apply Economic Sanctions to U.S.A

● Trade Relations: One of India's main trading partners is the United States.
A vast array of products and services, including IT services, textiles,
technology, and medicines, are traded on a bilateral basis. Trade flows
might be disrupted by sanctions, which could be detrimental to both
economies.
● Investment: Both Indian and American businesses have large assets in the
United States of America. Sanctions may hinder corporate partnerships
and joint ventures as well as discourage foreign direct investment (FDI).
● In terms of economic size, the USA is far bigger than India. India is a
major actor on the world stage, but its ability to effectively impose
sanctions on the United States is limited by its economic inequality.
● In simple terms, India would be at a disadvantage when applying
economic Sanctions to the U.S because of the disparity in economic
prowess and the impact on global influence.
b. Power of India to Apply Economic Sanctions to China
● China has a significant economic impact on the world stage due to its
second-largest economy. India's ability to effectively impose economic
sanctions is limited by the difference in economic size.
● Trade Relations: Indian industries that rely on Chinese imports, such as
electronics and pharmaceuticals, might face supply chain disruptions and
increased costs. Increased costs for items that were previously imported
from China may have an impact on Indian customers.
● India imports far more goods from China than it exports, creating a huge
trade imbalance in China's favor. Sanctions may impede this commerce,
impacting sectors of the economy that depend on imports from China.
● Simply to say, India would be most again at a Disadvantage when
applying Economic Sanctions to China because of the huge disparity in
economic prowess.
Ranking of Their Economic Power

● Compare and rank the economic power of the U.S.A., China, and India.

largest economies/ richest countries in the world in 2024, sourced from IMF data (as of
June 14, 2024):

RANK AND COUNTRY GDP (USD BILLION)

#1 United States of America 28,873

#2 China 18,536

#3 Germany 4,590

#4 Japan 4,112

#5 India 3,942

#6 U.K. 3,502
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