US-China Hostility

14th Annual China Conference

Since 1949, US–China relations have evolved from tense standoffs to a complex mix of intensifying diplomacy, growing international rivalry, and increasingly intertwined economies. Continued escalation of trade disputes and blame over the spread of the coronavirus are emblematic of a significant hardening of positions that extends well beyond these two issues. The importance of US–China tension in shaping either macroeconomic outcomes or firm-level decisions over a long time span has not been studied empirically, mainly for lack of an indicator that can quantify these tensions. We measure the intensity of public concerns over US–China tension and show that there are adverse economic consequences for both countries due to heightened tensions.

Speaker: Bo Sun, Federal Reserve Board