US-China Tension Index

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John Rogers, Bo Sun, and Tony Sun (2024) quantify tension between the United States and China by tracking related coverage in leading U.S. newspapers. Following the methodology in "Measuring Economic Policy Uncertainty" by Scott R. Baker, Nicholas Bloom and Steven J. Davis (2016), the U.S.-China Tension (UCT) index is constructed by computing the share of articles discussing rising U.S.-China tension, in particular, the share of articles containing mention of (i) United States (or U.S.) and China (or Chinese), (ii) contentious issues in the bilateral relationship, and (iii) phrases indicating tension. To determine the search terms, they utilize topic modeling algorithms, including K-means, guided LDA, and Newsmap analysis, to identify likely relevant words in a large number of manually identified articles that discuss rising U.S.-China tensions.

The UCT index exhibits close alignment with the views of business and policy decisionmakers. Its fluctuations parallel the frequency of U.S.-China tension discussions in corporate earnings calls and presidential rhetoric. Firm investment, especially for exposed companies, responds negatively to rising UCT. The index also tracks congressional anti-China legislation and U.S.-China voting dissonance at the United Nations.