Commerce Secretary Analyzes U.S.-China Trade Relations

US Embassy in China ^

[maui_hawaii]

The Great (Trade) Wall of China By Don Evans

President Bush believes that open markets and a level playing field are vital to job creation and economic growth. That is why the president rejects economic isolationism and why this administration is continuing to aggressively engage with China. Last week, along with Secretary of Labor Elaine Chao, I led the president's Export Council to China to advance economic engagement, expand access for U.S. exports and address areas of trade concern.

China is America's fastest-growing export market and our third-largest trading partner. Two-way trade exceeds $190 billion and over the last three years American exports to China increased 76%. But maintaining any relationship requires commitment and candor. We are working closely with the Chinese government to ensure that trade takes place through open markets and on a level playing field.

Two months ago, the Bush administration hosted Chinese Vice Premier Wu Yi in Washington for the Joint Commission on Commerce and Trade. The meetings produced positive breakthroughs that will expand opportunities for U.S. businesses. They also resolved seven potential World Trade Organization cases on high-technology products, agriculture and intellectual-property protection. These breakthroughs will expand opportunities for American workers and businesses.

While pursuing cooperation with China, the Bush administration has not and will not hesitate to enforce America's trade laws. We filed the first-ever WTO enforcement action against China, for its discriminatory taxation of U.S. semiconductors. We imposed the first safeguard actions against Chinese textile and apparel imports, and roughly half of all U.S. antidumping cases filed in 2003 were against unfair Chinese imports. However, while some would prefer to litigate for litigation's sake, we are focused on achieving real results, in real time.

Earlier this year, the Bush administration declined to accept two petitions that could have had a highly adverse impact on the Sino-U.S. trading relationship. We did so, in part, because of a belief that dialogue with the Chinese government is the best chance to produce results.

U.S. support for free trade depends on a fair showing from its trading partners. China needs to act on trade barriers because economic distortions compromise long-term potential. Resolving these problems is in the interests of both countries. American companies have the right to expect that their trading partners will treat intellectual property theft as a crime. Estimates show the computer software piracy rate to exceed 90% in China -- costing U.S. industry $2.4 billion in 2002. Sound trading relationships depend on partnership -- not piracy.

China must significantly reduce government micromanagement of the economy and introduce a far higher level of transparency, among many changes, before its transition to a market-driven economy can make meaningful progress. Market forces will not govern China's economy until the state improves the regulatory system and releases control over raw materials, the financial system, real estate, utilities and large enterprises within China.

In northeastern China, the state still owns or controls a majority interest of roughly 90% of all enterprises. Not surprisingly, that region now supplies only 8% of China's output -- down from 14% in 1981. Government control over the means of production radically distorts economic conditions, undermines efficient capital usage and compromises long-term potential. In addition, it creates a tilted playing field.

Last year, I advised China to lift its capital controls so that its entrepreneurs could experience greater financial freedom. Capital controls also compromise prosperity by misallocating a country's wealth. The unsound banking practices funded through the capital controls are equally troubling. China's state-run banks routinely extend loans to state-owned enterprises that are not expected to be repaid. As a result, there is a disturbing level of nonperforming loans in the portfolios of China's state-run banking system. Today, the big four state banks in China are, essentially, insolvent.

Clearly, there is much work to be done to open China's economy and curb government subsidies. That is why we traveled to China with a clear message: The U.S. has opened its markets to you; now you must open your markets to us. The Bush administration is determined because we know that American workers excel on even terms and we recognize that open markets spur economic growth and create jobs in America.

[maestro]

Commerce Secretary Analyzes U.S.-China Trade Relations

Anything via Canada!

[maui_hawaii]

If you think our legal system is bad you aint seen China's. One of the problems with it, is the people we have problems with will not lose in that system, ever.

[maui_hawaii]

That is why the president rejects economic isolationism and why this administration is continuing to aggressively engage with China.

Economic isolationism means much more than just China. If we restrict imports from everyone, thats isolationism.

If we restrict them from China, thats a sure method of engagement that will work for sure. Nothing should be off the table, including blocking imports from China.

Any idiot that uses that term 'isolationism' to try and pigeonhole everyone doesn't deserve to be listened to.

[Last Dakotan]

...why this administration is continuing to aggressively engage with China.

ROTFLMAO

[maui_hawaii]

They are (economically) engaging only partially.

Nothing should be off the table. They are limiting their own effectiveness.

We will not be isolationist if we impose stiff tarriffs on Chinese products. Thats the kicker. One country doesn't make an isolationist out of anyone. Thats an extremist view that they are trying to use to stop everyone from putting much needed heat on China.

We should use their same idiotic arguments against them regarding Iran. "If we don't have strong economic and other relations with Iran then WE ARE ALL ISOLATIONISTS..."

Thats what they are doing regarding China so why not Iran too.

[maui_hawaii]

I still stand by my original idea that I posted on FR I don't know how long ago.

America should sign into law numerous free trade agreements. Instead of 4 or 5, I am talking 50 or more that we have negotiated.

For those countries not holding and FTA in hand, they get 3 times the tarriffs and those with one get no tarriffs to speak of.

It will force the rest of the world to negotiate with us.

[GOP_1900AD]

The Fukuyaman camp continue their lock on power. This might be the case until the first day of WW3. That might be the only thing capable of discrediting them.

[sixmil]

True. I don't remember any of the tariff-free traders/labor-supply siders claiming we were isolationist by not trading with Iraq or Cuba.

[sixmil]

President Bush believes that open markets and a level playing field are vital to job creation and economic growth

That's a load of crap. What is it we will be selling to China that will create jobs over here? Let's assume we do create some jobs, aren't we just going to export them or import some more H-1B's? I don't see anyone benefitting from this except for corporations and shareholders. Hope eveyone has enough invested to live off.

[lelio]

Two-way trade exceeds $190 billion and over the last three years American exports to China increased 76%.

I love it when people resort to percentages. If we sold them two bic pens for $1.76 this year versus last year's $1 bic pen that's a 76% increase. Why doesn't Don come out and state the raw numbers?

Today, the big four state banks in China are, essentially, insolvent.

Well that's interesting. I'm surprised we haven't been asked directly to bail them out. Oh wait we are by continuing to buy hundreds of billions of dollars of product from their country, proping up a system that we say we don't like.

[lelio]

It will force the rest of the world to negotiate with us.

See, you're not thinking like a CEO politician. The goal here isn't to make the US wealthy by raising all our standards of living -- the goal here is to make businesses that outsource their labor to those countries and sell their products back into the US wealthy.

I also noticed that Don Evans didn't once mention human rights in respect to China. I suppose we all have our compartmentalization -- Clinton with sex and our administration with human rights.

[Willie Green]

This artile was already posted here: Commerce Secretary Analyzes U.S.-China Trade Relations: The Great (Trade) Wall of China

But to assure that you won't miss the benefits of my comment on that thread, I'll include it here as well.

 U.S. Trade with China 
(billion dollars)

Year		1991		1992		1993		1994		1995		1996		1997		1998		1999		2000		2001		2002		2003		2004 (4 months annualized)
U.S. Imports		19.0		25.7		31.5		38.8		45.5		51.5		62.6		71.2		81.8		100.1		102.3		125.1		152.4		161.7
U.S. Exports		6.3		7.4		8.8		9.3		11.7		12.0		12.9		14.2		13.1		16.3		19.2		22.0		28.4		35.1
Trade Deficit		12.7		18.3		22.7		29.5		33.8		39.5		49.7		56.9		68.7		83.8		83.1		103.1		124.0		126.6

"China is America's fastest-growing export market and our third-largest trading partner. Two-way trade exceeds $190 billion and over the last three years American exports to China increased 76%."

This is an excellent example of how the administration misleads with statistics. Two-way trade exceeds $190 billion. True. China sells about $160 billion to us and we sell $35 billion or so to them. Both exports and imports continue to rise. But the value of imports is increasing at a greater pace than that of exports, creating the widening trade gap. But by reading the Secretary's note, you might think everything is great with China trade.

China Trade: High Time for a Change in US Policy

[maui_hawaii]

I am not thinking like a CEO politician with his head up his butt.

If we truly employ those things which I posted in #8 then 'they' win, and 'we' win. Whoever 'they' and 'we' are.

Actually is almost all a "we" because 'they' are 'we'...

[LibertyAndJusticeForAll]

...a level playing field...

NOT!

[maui_hawaii]

Under those circumstances even China itself wins. When they employ reforms they get rewards. We should try not to cut them off, but at the same time not play games anymore.

[maui_hawaii]

When I see China implementing reforms and sticking to it, I will believe it.

[Last Dakotan]

America should sign into law numerous free trade agreements. Instead of 4 or 5, I am talking 50 or more that we have negotiated.

Agreed, I've sometimes wondered what all those bureaucrats in the Commerce Department do. Either a country grants equal access to its markets or we apply equal barriers.

[maui_hawaii]

This is an excellent example of how the administration misleads with statistics.

Its not just 'the administration'. There is a whole set of drum bangers that do that.

Two-way trade exceeds $190 billion. True. China sells about $160 billion to us and we sell $35 billion or so to them. Both exports and imports continue to rise. But the value of imports is increasing at a greater pace than that of exports, creating the widening trade gap.

Very good summation.