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BIZCHINA / Review & Analysis
Time to look beyond numbers in China-US trade gap
By David Michael (China Daily)
Updated: 2007-09-13 09:17
It is important to keep the big picture in mind. US policymakers should
be advocating the benefits of greater trade to both sides, rather than
seeking to erect barriers. By doing so they might also gain the leverage
needed to convince China to make some tough economic and social choices.
For instance, Chinese regulators might be convinced that it is in their
own interest to crack down on copyright and foreign patent violations and
improve intellectual property protections, issues that greatly concern US
companies.
The US also might be in a better position to encourage China to move
forward with meaningful environmental protection. This would include
implementing much stronger environmental emissions standards, investing
in new refineries capable of processing cleaner fuels, and mandating that
domestic Chinese producers comply with globally accepted pollution
standards.
China also needs to confront other problems. Despite its emergence as a
global economic powerhouse, the country is still home to 18 percent of
the world's poor, with 150 million people subsisting on less than US$1
per day.
But China's rapid economic development is lifting tens of millions of
people out of poverty, according to the World Bank. That is something
Americans should be happy about.
They should also be happy that Chinese people have an overall favorable
opinion of the US. A 2006 Pew poll of global attitudes, for example,
revealed that Chinese peoples' attitudes toward America are far more
favorable than the opinions held by some of its more traditional allies.
In considering the US-China trade relationship, Americans should reflect
on the following: The past decade of rising trade with China has helped
tens of millions of people in China rise out of poverty, has helped fuel
generally favorable attitudes toward Americans, and has helped provide
important export and investment markets for US companies, with the
potential for substantially more growth in the future. Is there some
other plausible scenario more positive than that?
The US and China each bring to the table distinct advantages and
disadvantages. China's main advantages are its low-cost labor pool, its
impressive infrastructure that enables companies to gain access to this
labor, and its pro-investment policies. Neither currency adjustments nor
trade barriers will change this situation.
Indeed, Oxford Analytics has recently reported that even a 25 percent
appreciation in China's currency would bring about only a marginal change
in the trade deficit.
Asking China to turn back the clock on its growing role in the global
economy is not the answer. Indeed, what will become really crucial in the
years ahead will be the task of working with China on issues of vital
common interest.
The decisions that China makes about growth, environmental and energy
policies, and global warming will soon be the most important questions
for all of us. The US would be well served to ensure that these issues
are prominent in its overall China relationship.
The author is a senior vice-president and director with the Boston
Consulting Group's Beijing office
(For more biz stories, please visit Industry Updates)
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