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| In the early 1980s, as the Reagan administration cut taxes while persisting with an expansion of military spending, US government borrowing requirements caused a massive appreciation of the dollar. |
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| This, in turn, led to a swelling of the trade deficit, as imports became cheaper. From a global perspective, the East Asian countries, with Japan at the forefront, benefited from the expansion of US markets. |
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| China was a novice in the game then, but had clearly entered the export-led growth phase at an opportune moment. But, looking at the situation from the US perspective, a key consequence of widening trade deficits was the emergence of protectionist sentiment. |
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Japanese automobile manufacturers were persuaded to exercise
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