est import trading partner and the 11th export partner to the USA but by the year 2005, China had become the second largest import and the fourth largest export partner and the third largest trading partner overall next to Mexico, Canada and Japan.
China has emerged as the main strategic partner to the USA. The USA has identified China as one of its top ten emerging markets. Just like commodities, capital requires high capital markets, and hence the USA has heavily invested in the Chinese markets, and this is a clear demonstration that China has become the largest overseas market for the USA capital.
China and the USA have recorded remarkable achievement in terms of financial cooperation and by the year 2005, China was holding US$254.4 in US treasury bonds as well as a considerable number of US private securities and stocks. Consequently, by 2005, the foreign reserve of China reached US$810 billion and 60 percent of this was USA capital. The trade between the two countries has been, however, faced with numerous challenges emanating from the increasing friction and conflicts like RMB exchange rates, Intellectual Property Rights, market access and trade balance. Trade wars have had the tendency of ruining the trade and economic ties between the two countries and are not acceptable. This has been exemplified by the restrictions and the counter restrictions that was involved the textile trade between the two countries that involved up to seven rounds of negotiations that culminated in the signing of a Memorandum of Understanding regarding the trading of apparel and textile. This reflected the settling of frictions and trade-based disputes in Sino-US economic ties.
The USA imports a lot of daily necessities from China and these goods have been established to be of a good quality and of low or reasonable pricing that can easily satisfy the US market. The Chinese products are of great benefit to the US consumers, and they help ease inflation and facilitate the