China and the United States share many common grounds including
trade and economic cooperation, and this cooperation develops
rapidly. The bilateral trade value was only US$2.5 billion in 1979.
In 2005, however, the trade volume had reached US$211.63 billion
according to Chinese statistics. Now the US has become China's
largest export country and second largest trade partner while China
is the US fourth largest export market and third largest trade
partner.
The China-US trade and economic cooperation is beneficial to
both sides. For China, it can promote economic development and
relieve the pressure on employment. For the United States, in my
opinion, it is important as well. Statistics by Morgan Stanley show
that using comparatively cheaper Chinese products has saved the
Americans about US$600 billion in the last ten years. Some
Americans admitted humorously that from the alarm clock used to get
up in the morning, to the toothbrush, to the sneakers worn in
jogging and to the quilt needed for sleep at night, they are all
made in China.
From another perspective, China also buys US treasury bonds,
which is tantamount to lending the use of China's foreign exchange
reserves to American investors. Americans get returns on the
investment made possible by China's bond purchase while China only
gets interests on the bonds. Aren't Americans benefiting from it as
well?
It is a fact that there is an imbalance in the China-US trade
with China running large surplus. This requires both sides to sit
down and seriously work out an appropriate solution.
First, the two sides use different statistics calibers and
methodologies. For example, statistics from the two countries on
the same surplus in 2004 were different, with Chinese statistics
putting it at US$80 billion and US statistics at US$160 billion.
The US employs the "origin of goods" principle, attributing to
China all Chinese exports to the US via the Hong Kong region or
other countries. China runs large trade deficits with Japan, South
Korea and Southeast Asian countries and according to this principle
the goods America exports to these countries that have been resold
to China should be counted as well.
Chinese statistics use the free on board (FOB) while the US uses
the cost, insurance and freight (CIF), leaving a difference in
freight and insurance. US statistics do not include trade in
service while as a matter of fact trade in service such as American
investment banks and consulting firms doing business in China is
also profitable.
Second, the China-US trade has a structural problem in that most
Chinese exports to the US are low-end products and a majority of US
exports to China are high-end products. American science and
technology is the most developed in the world. Statistics show that
only about 10 percent of all Chinese imports of high technologies
and high-tech products come from the US.
Third, we need to study how to better complement each other in
terms of export structure. Some American industries, like the
textile industry, also have structural problem. Frankly speaking,
even if restrictions are put on Chinese textiles it would still be
hard for the American textile industry to compete with those in
Mexico or other Southeast Asian countries, since the cost of
textile products in these countries is still lower than in the
US.
China has no intention of pursuing an excess trade surplus,
hoping to realize basic balance in trade. China and the US should
together explore a solution to reduce trade imbalance instead of
politicizing trade issues. An American senator described the
China-US trade imbalance in a speech as "the ships you see from
China to America are all loaded while those from America to China
are all empty". There is nothing surprising since what China sells
to America is shoes, toys and clothes, which must be transported by
loaded ships while things American sells to China are software and
chips, which need not be so shipped. Moreover, experts providing
financial and consulting services to China are sure traveling by
air.
We should, on the one hand, see the importance of the China-US
trade and economic relations to the two countries or even the world
as a whole. On the other, it must be noted that some frictions and
problems are inevitable in the process of trade and economic
development. They require serious analysis and study by both sides
so that appropriate solutions can be found.
This article by Cheng
Siwei, Vice Chairman of the Standing Committee of the
National People's Congress (NPC), is carried on the front page of
People's Daily Overseas Edition on March1 and translated by
People's Daily Online.
(People Daily Online March 3, 2006)
