|U.S.-China Trade Is Win-Win Game|
There's little connection between the trade balance and the value of the renminbi.
By ZHONG SHAN
Asound and stable China-U.S. economic and trade relationship is more important than ever.
China-U.S. trade and economic cooperation has generated huge and real benefits for the United States, while China has been gaining a lot from it as well. In 2009 China jumped to become the third biggest market for U.S. exports. American companies have cumulatively invested over $62.2 billion in 58,000 projects in China and reaped bumper harvests. Their profits in China amounted to nearly $8 billion in 2008 alone.
Since the outbreak of the international financial crisis, China has been supporting the efforts of the American people to tackle the crisis. On the one hand, China has increased imports from the U.S. While overall U.S. exports dropped 17.9% in 2009, exports to China hardly decreased. Many U.S. manufacturing firms have found comfort in the Chinese market as a shelter against the global financial storm.
On the other hand, good value-for-money, labor-intensive goods imported from China have helped keep the cost of living down for Americans even when they become increasingly cash-strapped. Without consumer goods from China, the U.S. price index would go up an extra two percentage points every year.
How should we approach the trade deficit, a heated topic in the China-U.S. trade and economic relationship and an issue closely tied to many others?
To start with, Chinese and U.S. interests in bilateral trade are roughly balanced. China-U.S. trade and economic relations include services and investment as well as goods. From 2004 to 2008, the U.S. surplus in services with China grew by a phenomenal 35.4% annually, dwarfing the growth in China's surplus in goods with the U.S.
In 2008, the total sales of American goods in the Chinese market, including goods exported from the U.S. to China, amounted to $224.7 billion, close to the value of goods China exported to the U.S. in 2008, which stood at $252.3. The two countries were almost balanced in terms of sales after adjustment for value-adding freight and insurance fees.
Next, the renminbi exchange rate is not the key to addressing China-U.S. trade imbalance. From 2005 to 2008, the renminbi appreciated by 21% against the dollar but China's trade surplus with the U.S. increased by 20.8% annually. Since 2009 the renminbi exchange rate has remained basically stable, but China's surplus with the U.S. has fallen by 16.1%.
Globally speaking, this is not an exceptional case. In 2009 the dollar depreciated against the euro, the Japanese yen and the South Korea won, which did not bring about fundamental changes in the trade between the U.S. and these countries. As a matter of fact, only a basically stable renminbi and dollar are conducive to the overall interest of the international community.
Finally, China always upholds and seeks balanced trade. The U.S. should vigorously expand exports to China. Only balanced China-U.S. trade could bring about sustained development, mutual benefits, and a win-win relationship. The achievement of this goal rests not with restricting China's exports to the U.S. but with increasing U.S. exports to China. We hope that the U.S., while implementing its strategy to boost exports, can scrap the Cold War mentality, relax its export control against China, and expand the export of competitive products to China.
Where should China-U.S. trade and economic relations go from here?
First, we should refrain from politicizing economic and trade issues. We should vigorously oppose trade protectionism, and give full play to the platforms of the China-U.S. Strategic and Economic Dialogue and the Joint Commission on Commerce and Trade. We hope that the U.S. can recognize China's market-economy status as soon as possible and include export-controls revision in the priority action plan of the U.S. National Export Initiative.
Second, we should expand the convergence of our interests in economic and trade cooperation. The two economies are highly complementary with huge potentials. At present, both are restructuring their industries and therefore their growth potential. We should give full play to our respective advantages in capital, technology and markets, and actively explore cooperation in trade in services, low-carbon economy and high-tech products.
Third, we should enhance trade and investment facilitation. The Chinese government will adhere to the opening-up policy as one of its basic state policies, and continuously improve policy transparency and trade and investment facilitation.
The government protects the legitimate rights and interests of foreign investors in accordance with laws. We hope that the U.S. will ease irrational restrictions on Chinese companies' investment in the U.S., and facilitate the movement of businesspeople between the two countries.
Fourth, we should promote the multilateral trading system. China and the U.S. should jointly push for a substantive progress in the Doha Round talks, and lock in the agreed outcomes from previous negotiations.
As Wen Jiabao, the Chinese premier, recently reiterated, it is always better to have a dialogue than a confrontation, cooperation than containment, and a partnership than a rivalry. As long as we approach the China-U.S. commercial relationship in a responsible manner we will definitely be able to make it more stable and sound.
Mr. Zhong is vice minister of commerce of the People's Republic of China.