Business
September 03, 2005
Sino-US trade to double in 2010 to US$300bln amid rows
Feng Xiurong, a 44-year-old female worker who lost her job in a Beijing-based textile company last month, did not believe it when she heard Sino-US trade is expected to double in five years. "My company just cut down employees because the United States closed its door to Chinese textile exports."
Feng has never been to the States. If she were to go there, she might come to appreciate the immensity of two-way trade. Millions of Americans shop in supermarkets like Wal-mart everyday, and they find it difficult not to end up with a commodity made in China if they want to save money.
Feng's nephew, Feng Jianzhong, might also help her explain it. The young man works in a shipping company. His office, like many other Chinese companies and governmental bodies, uses software from US companies, primarily the Windows system and Norton anti-virus software.
Despite rising trade rows, China and the United States will still maintain a rapid growth of bilateral trade due to the complementary advantages of the two economies, Chinese trade official Shang Ming said.
The total trade volume of the two nations is expected to hit 300 billion US dollars in 2010.
Shang Ming, director of the law and policy department of the Ministry of Commerce (MOC), said that in 2004, Sino-US trade topped 169.6 billion US dollars, about 69 times the figure in early 1979 when China and the United States established full diplomatic relations. Their trade volume since then has been growing at an annual rate of over 20 percent.
"Bilateral trade might double to over 300 billion US dollars in 2010," he said, adding that the scheduled visit by Chinese President Hu Jintao to the United States next month and frequent high-level exchanges between the two countries signal that "nothing can stop the trend of economic integration and trade development."
Statistics show that over 30 percent of toys, apparel, shoes, batteries, suitcases, lamps, pillows, furniture, computers, cameras and televisions in US supermarkets are tagged "Made in China."
"The United States has become the fastest growing overseas market of our company across the world," said Zhang Ruimin, CEO of China's Haier Group, which posted a record daily turnover of 10 million US dollars at most from January to June this year in the Untied States.
"The small-sized refrigerators we specially designed and manufactured for American consumers to store wine are sold like hot cakes in the United States," Zhang said.
Compared with China's export commodities to the United States, most of which are cheap goods for daily use, US' exports to China are much more expensive and complex.
Last month, Chinese airline companies signed a purchasing contract for 42 Boeing aircraft, worth of 5.04 billion US dollars.
As China is expected to become the second largest civil aircraft market in the world with double-digit growth in passenger's volume in the next few years, the US Boeing company has decided to put its new model 787 aircraft into use in China.
And it is very welcome here.
"The Boeing deal just made is an important step for Chinese and American companies to introduce new model aircraft, and represents a promising future in bilateral economic and trade cooperation," said Zhang Xiaoqiang, vice minister of the State Development and Reform Commission of China.
"The United States leads the world in the service and high-tech sectors, while China produces high-quality daily consumer goods with low labor cost," Li Yushi, vice president of the International Trade and Economic Cooperation Academy under the MOC told Xinhua.
The trade structure is the result of different stages of economic development in the two countries, said Li Yushi.
After the United States upgraded its economic structure in the 1990s last century, it became more focused on the high-tech industry and chose to import tremendous amount of consumer goods each year. Cheap Chinese commodities that find their way into the US market help American consumers lower their living cost, said Li.
TRADE DEFICIT
Despite the soaring volume in total two-way trade, some in the United States worry about the expanding trade deficit with China, which stood at 80.3 billion US dollars in 2004.
"The soaring Sino-US trade should be viewed in the global context," said Zhang Yansheng, a research fellow with the economic institute of the State Development and Reform Commission (SDRC), China's chief economic planning agency.
Last year, the trade deficit between China and east Asian countries and regions, including the Republic of Korea, Japan and Taiwan, stood at over 100 billion US dollars.
To make use of China's cheap labor cost, companies from these countries and regions transfer their raw materials and production plants to China, said Zhang. When the products come out, most of them are sold to America, the final market of global products.
China only plays a specific role in the global production line and its shipment to the United States partly depends on the amount of production east Asian countries would like to transfer to China.
Moreover, the profit rate of China's sales to the United States remains quite low. Taking a student-used good priced 88 US dollars in the US market as an example, 16 US dollars of the gross profit goes to the US department store, 32 US dollars to US trade companies, 20 US dollars to a Hong Kong middleman. Only 8 dollars of the profit goes to the Chinese foreign trade company and manufacturer, whose production cost is 12 US dollars.
The US-based Nike company does over 60 percent of its sneaker manufacturing in China, gaining huge profits from China's sneaker exports to the United States, statistics show.
"The more China exports to the United States, the more the US side benefits," said Jin Changyi, general manager of the Golden Globe Textile Corp based in Hangzhou, capital city of eastern China's Zhejiang Province.
The US economy has been growing continuously in the past ten years. To many economists' surprise, its inflation rate has been successfully maintained at low levels during the period, which had directly led to the substantial rise in the American people's living standard.
The rapid influx of a spate of Chinese commodities with low prices has contributed to price stabilization in the United States, economists have concluded.
In a more and more globalized world, as countries get closer with each other - like China with other east Asian countries, or China with the United States - complimentary advantages in a free trade environment foster fast trade growth, and it is harder to say who benefits the most from China's low labor costs, said Li Yushi.
Despite her misfortune, Feng Xiurong believes the fast growth of Sino-US trade is good news anyway. She remembers a saying told by her nephew. "When God closes a door in front of you, he will open a window for you". She thinks she can soon find a new job in the promising trade sector.
Source: Xinhua
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