In the pursuit of balanced trade with the U.S., China pours it on where it counts A week ahead of Chinese President Hu Jintao’s first state visit to the United States, Beijing and Washington reached a series of agreements intended to ease the bilateral trade imbalance, including resuming trade in U.S. beef, increasing Chinese market access to U.S. medical devices, telecom services and express delivery, and cracking down on intellectual property rights infringements.
These agreements were announced following the 17th China-U.S. Joint Commis-sion on Commerce and Trade (JCCT), a day-long meeting held April 11 in Washington, D.C., and co-chaired by visiting Chinese Vice Premier Wu Yi, U.S. Secretary of Commerce Carlos Gutierrez and U.S. Trade Representative Robert Portman.
“The JCCT has become an important platform to identify and resolve problems so that we can expand fair trade between our two countries. Mature trading partners can engage in frank discussions when working to resolve problems,” Gutierrez said at a press conference, adding both sides did exactly that during the JCCT meeting.
Echoing his words, Wu said the meeting “illustrates the spirit of mutual benefit, development and win-win.”
“It also demonstrates the goodwill of both sides to properly resolve problems through equal consultation and to ensure the steady development of China-U.S. economic and trade relations through a continued and strengthened cooperation,” she continued.
Established in 1983, the JCCT is an annual government-to-government platform designed to develop and facilitate the U.S.-China commercial relationship.
This year, besides the agreements on facilitating market access for the United States, the two countries have agreed to establish the China-U.S. High Technology and Strategic Item Trading Working Group under the JCCT framework, continue the Informal Steel Dialogue, start and strengthen the intellectual property protection mechanism, and enhance cooperation in tourism.
Paving the way
In February, the U.S. Department of Commerce released a report on trade indicating that its trade deficit with China had increased by 24.5 percent over the previous year to $201.6 billion (the Chinese official figure was $110 billion), drawing fierce protest from the U.S. Congress.
Ahead of the JCCT meeting, a 202-member Chinese purchasing contingent, led by Wu, held trade promotion activities in 14 American cities in an attempt to bolster U.S. exports to China.
During these visits, Chinese companies signed 107 contracts with U.S. firms, worth a total of $16.2 billion, including a purchase deal for 80 Boeing 737 planes worth $4.6 billion, as well as procurement of U.S. software products worth $1.7 billion and Motorola products worth $500 million.
These deals show the Chinese Government is taking a constructive approach toward bilateral trade frictions, which will help it to ease the trade imbalance with the United States, He Maochun, professor at Tsinghua University’s Institute of International Studies, said in an interview with The Beijing News.
According to an article in The New York Times, the large delegation of business and economic officials was dispatched to “display China’s buying power and to cool protectionist sentiment in Congress.”
Similarly, Vice Premier Wu also considered the delegation’s visit and her participation in the 17th JCCT as preparations in the economic and trade field for President Hu’s visit to the country, as she mentioned during an April 12 press conference at the end of the JCCT meeting.
Wu also said that China would import $1 trillion of goods every year for the next several years. She rejected comments that the Chinese market is unfair toward American companies and that the Chinese market is not open enough for American companies, saying the Chinese side is very much “willing to increase our imports from the United States.”
But Wu emphasized that for this to happen, China would consider another factor. “We look forward to seeing the relaxation of hi-tech export controls practiced by the United States against China,” she said.
She told the media that China would create favorable conditions for the entry of products from foreign countries, including the United States.
Summarizing her visit to 14 U.S. cities in 13 states, Wu said she found that not only the governors but also the business people of those states “have a very strong interest and passion to work with China in the economic and trade field.”
American business people warmly welcome the investment of Chinese enterprises in the United States and they also want Chinese business people to buy more things from their country, she added.
“I’d like to tell you the atmosphere in those states is absolutely different than the atmosphere here in Washington, D.C. And I do believe the atmosphere we found in those states is the true representative of the true willingness of American people,” Wu said.
Zhao Zhenge, Deputy Director of the Department of International Relations of the China Council for the Promotion of International Trade, and also a member of Wu’s delegation to the United States, shared these thoughts.
Zhao told Shanghai-based newspaper Dongfang Morning Post that from his experiences with representatives of U.S. political and business circles, he felt that U.S. enterprises had confidence in the Chinese market.
“Despite the differences between the two countries on economic and trade issues, the United States is looking forward to the Chinese market,” Zhao said, adding that the U.S. entrepreneurs he met with had voiced expectations of cooperation with their Chinese counterparts and of the Chinese market opening to a greater extent.
Seeking results
U.S. Secretary of Commerce Carlos Gutierrez expressed his interest in and appreciation of the Chinese buying mission at the closing press conference of the JCCT session, saying that those efforts
“compliment the policy changes we agreed to today.” He continued that the real outcome of the 17th JCCT meeting “would be known when we see the results.”
“We will both be looking for results before the next annual meeting to bring additional equity and balance to the U.S.-China trade relationship,” he added.
Asked what he can point to as a framework to assess the success of these talks and the commitments that are made, Gutierrez said that the focus of the relationship with China has been “the deficit and the lack of balance that deficit represents.” He believes the way to address the deficit is to increase U.S. exports, but not to create barriers limiting imports.
“Therefore, what we have done throughout this meeting today and throughout the year, and what we will do throughout the course of the year--it’s not just at one meeting--is to continue to discuss ways to improve market access for U.S. companies, discuss ways where we can assure that intellectual property belonging to U.S. companies is protected in China, and that there is transparency in business law so that there is no discrimination against U.S. companies versus domestic companies,” Gutierrez said.
Portman, who publicly blamed China-U.S. trade relations for the lack of balance, equity and durability, said at the press conference that “one meeting is not going to solve all of our outstanding trade issues with China, but through our discussions today, which were very frank and constructive, we were able to solve some problems.”
Portman said the U.S. goal is to open the Chinese market to American products and services. “We aren’t there yet, but we’re making progress,” he said.
U.S. Secretary of Agriculture Mike Johanns, meanwhile, offered a positive example of trade with China. He said there is a trade surplus between the United States and China in terms of agricultural products. According to Johanns, since China’s entry to the World Trade Organization in 2001, U.S. agricultural exports to China have more than tripled.
“China is the fifth largest market for U.S. agricultural products, and it’s our largest market for U.S. soybeans and for U.S. cotton,” he said.
Commenting on the purchase by Chinese importers of soybeans and cotton and poultry in the United States during Wu’s visit, Johanns said, “That’s very positive on China’s part. It’s something that we wish we could do with every country.”