CHINA BELONGS
The current occupant of the White House has sent his much anticipated China Trade Legislation to Congress, and a great deal of rhetoric and posturing can now be expected, both in our country and in Beijing. At stake, of course, is whether China will be granted permanent normal trade relations status with our country, a key factor of China's acceptance into the World Trade Organization. The debate, especially in a national election year, is likely to become heated and perhaps even outrageous.
First, there is the issue of most favored trading nation status with our country. Based on trade, China needs our country more than we need China. The United States has everything to gain and not much to lose when it comes to negotiating with China; on the other hand, there is a great deal at stake for China. Our exports to China nearly tripled in the last decade, rising from a little under five billion dollars to more than 13 billion. However, China accounts for less than 2% of total exports from our country. In other words, our exports, to one of the largest most dynamic countries and economies in the world last year, were only slightly larger than our total exports to little Belgium.
On the other hand, however, China's exports to our country surged nearly tenfold during the decade of the 90s, and grew more than 32% last year alone. China's exports to the United States totaled 50 billion dollars last year, or almost four times our exports to China. The U.S. market now accounts for more than a quarter of the total Chinese exports and, be assured, that represents a big and significant market for the Chinese. By the way, despite what you may have heard, goods imported from China are really not taking that many American jobs away; they are really substituting for products not produced in the U.S., anyway. China's top exports to us are mainly high volume low-tech goods that our country gave up producing long ago. The real losers in our increased imports from China have been Korea, the Thailand, and the Indonesia.
Interestingly enough, there would be no Fourth of July, and perhaps even no Christmas without China. China produces most of the world's fireworks, and 60% of our imported toys, sporting goods and appliances. Additionally, China accounted for 44% of our imports of apparel and accessories last year.
Recently, Treasury Secretary Lawrence Summers repeated that he believes there are enormous commercial benefits available if Congress approves legislation to grant permanent normal trade relations to China. Summers highlighted three critical advantages to the passage of the bill that the administration has sent Congress. He said, "First, there are direct and commercial benefits of the market opening agreement that we concluded last fall. Second, there are economic and broader benefits to the United States of promoting economic and social change in China. Third, there is the ultimate enhancement of America's national security interest that comes from integrating China more closely with the community of nations."
I think at the bottom line, that is really the key to all of this. China is too big, has too many people, and has too much economic potential to be either accidentally or intentionally left out in the cold. It is in our best interest and the world's best interest to make China a viable commercial international economic participant. To that end, the first step is for Congress to grant most favored nation trading status to China. We may not like their internal politics, or their stance on human rights, but goodness knows, many of the nations we trade with on a "most favored nation trading basis," are scoundrels, and we seem to just turn the other way. If you doubt that, check the human rights stance of Russia or Saudi Arabia. In the meantime, once that is passed by Congress, then China's acceptance into the World Trade Organization is almost a foregone conclusion, and China can then take her place and participate fully in the world community.
(Tom Butenhoff is a First Vice President with J. E.
Liss & Company in Milwaukee. The views are his and not necessarily
those of Liss Financial Services or the Job Connection/Hiring
Network.)