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Trade Also Topping US-China Agenda - 2003-12-09

Along with the political and diplomatic issues that dominate the relationship between the United States and China, American officials say trade also tops the agenda. The U.S. trade deficit with China is expected to reach $120 billion this year, the largest imbalance ever recorded between the United States and any other country.

In greeting Chinese Prime Minister Wen Jiabao at the White House Tuesday, President Bush praised China's economy as one of the great achievements of our time. Mr. Bush said Chinese economic growth has brought great benefits to China and its trading partners around the world.

But he added that a growing China also needs to abide by international rules. "We recognize that if prosperity's power is to reach into every corner of China, the Chinese government must fully integrate into the rules and norms of the international trading and finance system," he said.

Mr. Bush's comments were backed up by a senior administration official, who spoke on condition of anonymity. The official acknowledged that China is the most rapidly expanding export market for U.S. goods. But he added that Chinese exports to the United States are expanding even more quickly.

The U.S. official pointed to what he called an "openness gap," or Washington's feeling that the U.S. market is more open to Chinese exporters than the Chinese market is to American businesses.

Chinese Prime Minister Wen acknowledged that his government is aware that the huge U.S. trade deficit is one of the biggest bilateral economic issues. "The Chinese government takes this problem seriously and has taken measures to improve the situation," he said.

The large trade imbalance touches on other issues that also are expected to be addressed in bilateral economic discussions.

David O'Rear, chief economist for the Hong Kong General Chamber of Commerce, an organization that includes businesses involved in shipping and export services, said he expects topics to include disagreements over the value of China's currency and recently-imposed U.S. quotas on certain Chinese textiles. "I think the discussions we've heard this year about the currency value, as well as the U.S. imposition of tariff barriers, other barriers on imports from China, are the two top issues," he said.

Washington argues that China is keeping its currency, the yuan, artificially weak to give Chinese exporters an unfair advantage. President Bush is expected to urge Prime Minister Wen to take steps to move the yuan to a free-floating currency.

At the same time, concrete steps are being taken to improve trading conditions between the two countries.

In Washington Monday, visiting Chinese Communications Minister Zhang Chunxian signed a five-year maritime agreement with Transportation Secretary Norman Mineta. "This agreement offers U.S. companies similar privileges to those that Chinese companies already enjoy in the United States," said Mr. Mineta.

Chinese communications minister Zhang emphasized the agreement's importance to bilateral trade. "The China-U.S. trade has so far exceeded $100 billion. Sea-borne transportation is the most important means of transport in serving trade. The sea-borne freight volume between China and the United States ranks first among all shipping routes," he said.

One company that has benefited from strong trade between the United States and China is Boeing, which last month received a $1.7 billion contract to supply 30 737 planes to five Chinese airlines.

Larry Dickenson, senior vice-president of sales for Boeing Commercial Airplanes, said his company does well in China as long as there are no major snags in the U.S.-Chinese relationship. "We've been selling airplanes to China for a long time. And the airlines, because of the economic growth, desperately need these airplanes. There have been political issues between the two governments [over the] last couple of years that have sort of slowed that process down. Our ability to sell airplanes over there is very much related to that relation, the U.S.-Sino relationship. And when that is stable and normal, we'll sell a lot of airplanes," he said.

Mr. Dickenson said he expects China will continue to be one of the company's main markets. "More and more Chinese are traveling. More and more Chinese are traveling overseas. And that will all produce demand for more and more airplanes. We've got 1.3 billion people over there, all waiting to take an airplane ride," he said.

The Boeing executive is echoing the optimism of western businessmen from the 19th century, who had hoped to make their profits by turning China's population into a nation of consumers. Instead, these days, inexpensive Chinese-made goods flood western markets such as the United States.

That is why U.S. pressure is on to try to reverse that trend.