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From chapter 17 of “the new world of international relations” it can be seen that the prosperity of china is not well received by the Americans. This is because most Americans view china as a potential threat both economically and politically in terms of military. For instance, over the [past few years, china has been the fastest growing destination market for goods produced in the US. In 2006, USA exports to china increased by 34%. This rise of china as an economic powerhouse has led to decreased economic capability of America. This is because America is not able to compete with low costs of labor in china. This has made domestic firms to close down or migrate to other sectors. This has lead to closing down of many firms and consequently, America has lost the market share. This has made America entirely depend on china for their goods. It has reached a point where china can dictate their prices and terms to America since it is confident that America relies on Chinese imports. (Roskin 2010)

The rise of china both politically and economically, according to chapter 17 of the book, will mean that there will be an increased competition that might result in manufacturing firms that are the least productive being closed or competing with imports from china. Any effect that Chinas prosperity has on the United States is the price effect. This allows firms in the US to benefit from lower costs. This expanding trade investment in china has contributed to a shift in the employment structure of the US because most people in America have moved from manufacturing to providing services. This has resulted in loss of jobs for very many people. China has become the largest foreign owner of US treasuries because of its growth both economically and politically. China has become the largest banker. For instance, whenever the US pressures china to raise its Yuan value, china threatens to sell part of its holdings.

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