Who Supports Free Trade with China? Understanding the Pattern of Corporate Support for U.S.-China Trade Relations

Dr. Ka Zeng

The U.S.-China “trade war” that has captured news headlines since 2018 reflects the United States’ deep frustration with structural impediments to trade in the Chinese economy as well as the emerging strategic rivalry between the two largest economies in the world. Relatively little understood, however, are the preferences and lobbying patterns of business interests in the United States regarding U.S.-China trade relations. This paper addresses this gap in the literature and seeks to assess the pattern of coalitional politics in the U.S. toward trade relations with China. It will be hypothesized that while pattern of corporate support for China trade continues to lend support to traditional arguments emphasizing the importance of export orientation or international production for businesses’ trade preferences, it is also increasingly being shaped by supply chain integration and multinational corporations (MNCs)’ concerns about market access barriers or industrial policy in China. Specifically, support for China trade will be higher among firms in industries that are more highly dependent on imports of intermediate products from China. At the same time, while multinational tend to be strong support of free trade, MNCs in those sectors faced with significant impediments to trade resulting from either market access barriers or Chinese industrial policy are more likely to voice concerns about the bilateral trade relationship. Statistical analysis of the pattern of lobbying and campaign finance contributions of Fortune 500 companies in the United States from 2006 to 2018 lend substantial support to the above conjectures. These findings contribute to a better understanding of the domestic landscape in the U.S. over trade relations with China, pointing to the need for us to take into consideration the role of global supply chain linkages and concerns for fair market access in influencing the pattern of firm support for free trade policies.