Effects of U.S. Bilateral Trade with China on U.S. Economic Growth

It is widely seen exports could promote growth, while imports may hinder growth. Thus, the huge amount of U.S. trade deficit with China causes some tension between these two countries. This study investigates the possible effects of U.S. exports to China and U.S. imports from China on U.S. growth in the long run. By applying Autoregressive Distributed Lags Model and employing annual data from 1985 to 2016, we are able to show that the effects of U.S. bilateral trade with China on U.S. growth are distinct from the effects of U.S. total exports and imports. Further, although U.S. exports to China do not affect U.S. growth in the long run, U.S. imports from China may actually promote U.S. growth in the long run.