Foreign and Military Affairs

Great benefit for US from Sino-US trade co-op

(chinadaily.com.cn)
Updated: 2011-01-17 18:43

US beneficiary of Sino-US trade cooperation

Besides direct benefits from exports to and investment in China, cooperation with China is also a boon for the US macro economy, as is demonstrated by US consumers' interests.

Statistics show, of all China-made products entering the US market, daily consumer goods such as clothes, shoes, socks, toys, suitcases and electronic products account for about 75 percent. These quality products with low prices have greatly improved Americans' lives, expanding their choices while shopping and bringing real benefits, especially for low-income groups. It has also led to a relatively low inflation rate for the US economy faced with pressures of fiscal and trade deficits.

According to a research by the US company Morgan Stanley, each American could save more than $300 in their expenses by purchasing goods from China in 2009. According to a study by the US-China Business Council, the gross domestic product (GDP) in the US should have risen another 0.7 percent by 2010 due to its increasing investment in trade to China, while the prices should have fallen by 0.8 percent. Adding the two research results, the disposable income of each US household should rise $ 1,000 every year. "Goods from China meet the demand of American consumers and will help stabilize the US market price, reduce the risk of inflation and maintain economic stability," said Liu Haiquan, head of the Comprehensive Department of China's Ministry of Commerce.

Sino-US economic and trade cooperation have also effectively increased US jobs. US Secretary of Commerce Gary Locke said in a speech given to the US-China Business Council in January last year, "If we just boosted our exports to Asia by one percent, that would support another hundred thousand (10 million)new jobs in the United States." Accordingly, US exports to China from 2001 to 2008 provided the country with 2.57 million new job opportunities. Direct investment from Chinese companies to the US has also increased dramatically in recent years, making positive contributions to local employment. Some Chinese giants such as COSCO, CNPC, Lenovo, have brought a lot of employment opportunities as well as economic and social benefits to local residents in the US. The Haier Group created thousands of new jobs for Camden City since its establishment of industrial parks in South Carolina in 1999. In every ten Camden families, you can find at least one person working as a Haier employee. The city thus developed into a "hometown" of household appliances with an annual output of more than 20 million products. The WanXiang Group had nearly 30 projects invested in the US, creating nearly 5,000 new jobs. In the year 2009, when many US enterprises cut jobs, the WanXiang Group created a number of new jobs for Illinois through their new investment projects.

Sino-US economic and trade cooperation is the result of the increasingly international nature of the globalised trade market. The United States could use this to their own benefit, combining their advantages in financing, technology and management with China's abundant labor resources.

Therefore, the international competitiveness of US products and US enterprises could be improved and the US industries' share in the international market could be expanded. At the same time, the move creates the conditions for US industries' transfer to high value-added sectors. Take computer manufacturing for example, China produced 150 million computers in 2008, with almost all the chips used in the central processors imported from US enterprises such as Intel or Advanced Micro Devices.

China is now the largest holder of US Treasury bonds. According to statistics released by the US Department of the Treasury, as of October 2010, the balance of US Treasury bonds held by China reached $906.8 billion. During the global financial crisis, China did not trim its holdings of US treasury bonds, but increased them. The move is important for the United States if it is to maintain a stable and mobile financial market, ease its credit crunch and promote trade financing, beneficial for the country's goals in macroeconomic regulation. A report released by the US Congressional Research Service Bureau in July 2009 pointed out that if China did not purchase US bonds on a large scale, US interest rates would increase by 0.5 percentage points. Accordingly, the US can save itself $61.6 billion on bond interest payments.

China has a huge favorable balance of trade? The exchange rate of RMB is undervalued? Be rational when listening to discordant voices from the US.