Paul Samuelson held that free trade may also be detrimental to a nation's welfare considering technology advancement.The enhancement of one nation's productivity may persistently reduce the welfare of its trade counterpart owing to the reduction of potential trade benefit between the two nations.Conducting with a critical analysis of Samuelson's model,this paper forwards the following six points of view.First,a cycle of"self-sufficiency,free trade,and self-sufficiency"may emerge between nations with trade relations.Second,the return to self-sufficiency after free trade is equal to economic decoupling.Third,economic decoupling can be subdivided into natural decoupling and artificial decoupling.Fourth,the scenario of keeping natural decoupling from the artificial one is called the decoupling paradox.Fifth,transaction cost,investment,and the economy of scale are expected to accelerate or decelerate the emergence of the Samuelson cycle;however,the existence of both the Samuelson cycle and the decoupling paradox remain unchanged.Last,nations within the Samuelson cycle are expected to engage in fierce games regarding economic strength and trade power.
trade theorythe Samuelson cycleeconomic decouplingthe China-US game
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