On July 15, 1971, the president of the United States, Richard Nixon, announced that he would visit the People’s Republic of China the following year. That visit ultimately took place from February 21 to the 28, 1972. It was a watershed moment for the United States and China. The sojourn would soon lead to full diplomatic relations between both countries and to a commercial and trade exchange that on most counts has benefited them both. Although Nixon’s move was made to gain leverage in U.S.-Soviet Union relations as he attempted to bring the Vietnam War to an end, when all was said and done, the surprising attempt to get along with a communist adversary forever altered the balance of power, reshaped the world’s geopolitical map, and basically put an end to the Cold war.
Besides the collateral dividends brought about by the friendlier relations between the two countries, Nixon’s move ended up becoming a sort of x factor, a timely catalyst that in the long run engendered enhanced economic growth in both nations, especially in China. The following data provides an idea of that growth. In 1972, the year of Nixon’s visit, the United States ended up with a GDP (Gross Domestic Product) totaling $1,279 billion; China had $114 billion, less than a tenth the size of the U.S. GDP. In 2020, according to the World Bank, the United States had a GDP of $20,937 billion, while China ended up with $14,723 billion. It was impressive growth for both countries, though China’s rate of growth was much larger.
There’s something else that needs to be pointed out. It has to do with the benefits that some international economic and commercial relationships provide. Those dividends come in the form of jobs, of new sources of revenue, and of wealth creation. The transformation of China’s economy presents solid proof of those benefits. In 1972, China was a poor country, inhabited by mainly poor people. Today, China has the second largest economy in the world, and a consumer market that will soon surpass the size of the retail market in the United States.
But, did the U.S. economy suffer as China grew? Not really. On the contrary, the bilateral commercial relationship between both countries has also been a boon for the United States, which is now able to sell goods and services to a market that for all practical purposes wasn’t around until after 1972.
Although some detractors might want to state otherwise, trade between both countries has grown tremendously since soon after the beginning of the new economic relationship. And that trade has greatly benefited the U.S. economy. According to official data, commercial trade between both nations grew from $5 billion in 1980 to $660 billion in 2018. Some might argue that the U.S. continues to run a trade deficit with China, but, at the end of the day, trade deficits with one country are part of a bigger picture, the one that paints overall surpluses and deficits with all countries. In the case of the United States and its economic picture, it can be concluded that the country is doing okay, and that it continues to grow year after year. Its current economic growth rate, by the way, is estimated at 6.5 percent.
My point? It makes sense to help grow other markets, the ones that require nurturing, like the ones in many of our neighboring countries in the Western Hemisphere. Doing so helps create viable consumer markets that they can in turn be able to buy our products and services.
Latin America and other nations in the Western Hemisphere offer such opportunity, to form a myriad of commercial relationships like the one created between the U.S. and China. Not counting Canada and the United States, there are over six hundred million people living in that geographic area right now. What if most of them became part of a new and invigorated consumer market, ready and able to buy products and services from willing providers? Like from the United States and Canada?
NOTE: This is part three of a series of articles promoting economic growth in the Americas. I welcome comments. I recently formed the non-profit corporation Growing The Americas. I have a B.A. from Florida State University in Inter-American Studies (1970), and an MBA from the University of Utah (1977). I was born in Mexicali, Baja California, on the Mexican side of the border. Soon after turning sixteen, in the summer of 1962, I left Mexicali and accompanied my family to California. I served in the U.S. Air Force from 1965 to 1977, six years as an enlisted man and six more as an officer, flying in the back seat of the F-4. I left the military with the rank of captain.
AUTHOR: Pedro Chávez