Trade relations with China are a hot-button issue in Washington, as threats of tariffs and arguments over protectionism swirl around Capitol Hill. But beyond the sound and fury, the U.S.-China relationship is healthier now than it's ever been, and continues to move in the right direction.

In the study "Growing Pains: The Evolving U.S.-China Trade Relationship," Daniel Ikenson, associate director of the Cato Institute's Center for Trade Policy Studies, explains that U.S.-China relations, once acrimonious, have followed a slow, deliberate trajectory towards a working professional relationship.

In the first four months of 2007, the United States lodged three formal complaints against China in the World Trade Organization, and for the first time in 22 years it applied countervailing (anti-subsidy) duties to imports from China. The actions were met with incredulity and anger in China and the United States, fueling speculation that a trade war is imminent.

Putting recent actions into context by suggesting they "are not extraordinary actions demanding extraordinary conclusions," Ikenson offers a principled defense, arguing that the "three recent U.S. WTO actions are all about encouraging China to open its market further in accordance with its commitments."

Explaining why he believes a trade war is unlikely, Ikenson reminds that "Under the [WTO], members can retaliate in response to an action or inaction of another member only when such a course has been authorized by the Dispute Settlement Body, and only in measured proportions."