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'US-trade': a great prospect, but Americans must scurry

Two-way trade between the United States and China could grow sharply during the next several years -- if American political and business leaders are willing to compete more effectively with overseas nations.

That is the view emerging here after Congress approved mmost-favored-nation trading status for China earlier this year.

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This was the approval in January of an agreement signed in Peking last July, under which US tariffs on Chinese goods to the United States will be cut roughly in half, from around 20 percent to 10.5 percent on average -- a level imposed on most US trading partners.But analysts say that to bring on any broader volume of trade than current levels, in fact, a number of steps must be taken here:

* Congress must quickly allow the US Export-Import Bank to issue credits and loan guarantees to China under terms of the 1974 Trade Act.

Although Congress is expected eventually to authorize up to $2 billion Eximbank credits, it must first "resolve" the issue of older, still outstanding Eximbank-type credits made to the former Nationalist government before its collapse to the Communists in 1949, says N. R. Chen, a China specialist with the US Department of Commerce.

* Us manufacturers must themselves become more aggressive in wooing the Chinese market. Currently, European and Japanese firms are vigorously -- and successfully -- nailing down a lion's share of China's foreign trade.

During the 1979, notes Christopher H. Phillips, president of the National Council for United States-China Trade, total two-way trade for the People's Republic reached $28.4 billion. (China Economic News has put the figure at $30. 2 billion.)

The United states, however, "had only 7.2 percent of that trade, or $2.3 billion."

Japan, by contrast, had close to 25 percent of the total (a sizable $6 billion), while West Germany, Canada, and France also snapped up an important part of the pie.

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Mr. Phillips, for his part, believes that US-China trade could reach $8 billion by 1985, $3 billion representing imports from China and $5 billion comprising US exports.

Commerce Department projections are within the same range.

But to reach that level, Mr. Phillips argues, the US must first compete more effectively for specific projects in China. That in turn will require an extension of Eximbank credits. The Senate is taking up this issue now. Full congressional authorization is expected sometime later this year.

Credit and loan guarantees are expected to be authorized for fiscal year 1981 , beginning in October, rather than for the current 1980 fiscal year.

The imporatance of Eximbank credits cannot be understated, China-trade analysts say. Mr. Phillips notes that during the period from December 1978 to November 1979, bank credits and loan guarantees authorized by overseas governments to China (excluding the US, which does not yet authorize such loans) reached $16 billion.

In fact, he says, overseas nations have already extended a yearly average of roughly $400 million of credit over the next 5 to 10 years in Eximbank-type credits.

Reaching $8 billion in two-way, US-China trade during the next several years is highly "plausible," says Harald B. Malmgren, a Washington-based international trade analyst.

There is "strong demand" for a large-scale development projects within China, he notes.

Moreover, China has "proven its credit worthiness" over the years. Many other less-developed nations are now heavily in debt to US and European banks, plus international lending agencies. So China is very "attractive" as a trading market, Mr. Malmgren explains.

Also aiding the momentum for stepped-up trade with the mainland, he says, is the fact that many congressional "hawks," who are very critical of the Soviet Union, "will want to do all they can to help play the 'china card.'"

In a visit to China last year, Vice-President Walter Mondale talked in terms of $2 billion in loan and Eximbank credits and loan guarantees to China. That amount is considered likely to win congressional approval.

Projects that would require Eximbanks support, says Mr. Phillips of the National Council, include those for hydro on the yangtze River and for ferrous and nonferrous smelting and production, coal and iron ore production, and for making machine tools and transportation equipment, particularly aircraft and locomotives.

China is seeking technology and heavy industrial equipment from the US. Also , it could buy as much as $1 billion in American cotton and grain this year, according to Peking reports. To earn dollars, it will likely continue to rely on sale of textiles and light manufactured goods, mainly handicrafts, to the US, Mr. Chen of the Commerce Department notes.


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