CHINA / National
China output not a threat, US official says
(New York Times)
Updated: 2006-04-04 08:55
The United States has nothing to fear from the rise of China as a
low-cost manufacturing power and should concentrate on further growth in
high-value industries, Commerce Secretary Carlos Gutierrez said Friday.
At a time of mounting friction over a $202 billion trade deficit with
China, Mr. Gutierrez said United States unemployment was declining and
wealth increasing even as imports from China rise.
"Our economy is growing, and the average take-home pay per American is
increasing," he told a business forum in Tokyo.
On Wednesday, Mr. Gutierrez issued a blunt warning during his visit to
Beijing that rising protectionism in Washington could hurt China if the
country failed to open its markets further to American products.
The two messages highlighted the fact that Washington is more concerned
with what it perceives as Beijing's unfair trade practices than with the
growing might of China's manufacturing industry.
The Bush administration and American manufacturers have long complained
that China keeps its currency, the yuan, undervalued to give its
exporters a competitive advantage.
They also argue that a broad range of regulatory barriers, subsidies and
rampant theft of intellectual property restrict United States exports to
China, contributing to the ballooning deficit.
The European Union joined Washington on Thursday in confronting China at
the World Trade Organization over tariffs that Beijing places on auto
part imports.
This trade gap is now one of the major irritations in what senior United
States officials describe as the most important global economic
relationship of the 21st century. It seems certain to be a source of
contention when President Hu Jintao of China visits Washington in April.
Some trade specialists maintain that United States and European Union
manufacturers have little choice but to surrender low-cost manufacturing
to China.
"For the time being, the strategy for developed countries is to go
further into new-generation technology and value-added products," said
Yan Lan, a Beijing-based specialist on international trade with the
French law firm of Gide Loyrette Nouel.
Senior United States trade officials acknowledge that trade between China
and the United States is complex with benefits to each side.
"The United States draws significant benefits from our commerce with
China," Mr. Gutierrez said Wednesday in a speech in Beijing after he held
talks with senior Chinese leaders. "Our consumers gain additional choices
and many American companies are operating profitably in China."
Senior Chinese officials argue that some critics of the United States
trade deficit fail to recognize that a significant proportion of Chinese
exports of manufactured goods are shipped by subsidiaries of American
companies or subcontractors.
And they note that the value to China of these exports was often limited
to inexpensive labor, materials and packaging �� while the high-value
returns from design, marketing and retail sales were earned in the United
States.
Despite continued American frustration over the deficit, there are signs
that some of this tension could ease.
Two of Beijing's most strident critics in the Senate, Charles E. Schumer,
Democrat of New York, and Lindsey Graham, Republican of South Carolina,
this week delayed plans for a bill that would have required heavy tariffs
on Chinese imports if Beijing failed to let its currency rise in value
against the dollar.
After a weeklong visit to China last month, both lawmakers said Chinese
officials had expressed willingness to allow the yuan to appreciate and
tackle other barriers to United States exports.
The yuan did rise this week, albeit incrementally, and it finished the
week at its highest level since July, when it was partly released from a
peg to the dollar. The dollar eased to 8.0175 yuan on Friday from 8.027
yuan on Thursday, adding to a gain for the yuan of about 0.5 percent
since early February.
Some trade specialists suggest that trade tensions can also be expected
to ease if both sides recognize that they have a lot to gain from
cooperation rather than conflict.
Mr. Gutierrez said Friday in Tokyo that China and the United States were
at different stages of development and not competing head-on.
"China has built its economy on the basis of manufacturing of
commodity-type products," he said. "What we have seen in the U.S. is that
our new jobs that are being created are in the area of higher-value
manufacturing, differentiation of products, higher technology and in many
cases new services."
To remain competitive, he said the United States would need to improve
education and encourage research and development.
He suggested that China would eventually need to follow the same path.
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