Wrangle over textiles threatens overall fabric of Sino-American ties
When it comes to textiles, the United States and China don't see eye to eye. The Chinese look at textiles in the overall context of Sino-American trade. Their basic argument is that for several years they have bought much more from the US than the US has bought from them. Their textile exports to the US, which reached over $800 million last year, are one of the most promising means they have of reducing this trade gap.
Citing what it sees as excessive textile imports into the US, where the domestic industry has fallen on hard times, the US has slapped unilateral restraints on Chinese textile exports. China retaliated Jan. 19 by announcing it would accept no new imports of American cotton, chemical fibers, and soybeans. Secretary of State George Shultz is unlikely to be able to solve the substantive aspects of the dispute when he visits China Feb. 2-6, but he will do his best to get the logic of the American position across to his hosts, even if they continue to disagree.
From the Chinese viewpoint, the American effort to restrain the growth of textile imports is an attempt to perpetuate the advantage the US already enjoys in Sino-American trade. Figures support the Chinese argument. The trade gap has been narrowing, but from January through November last year, according to official American figures, the US exported $617 million more to China than it imported.
(In 1980, overall trade was $4.8 billion, and the US had a surplus of $2.7 billion. In 1981, overall trade increased to $5.5 billion, and the US surplus shrank to $1.7 billion.)
The overwhelmingly outstanding item in US exports to China is wheat, totaling November of 1982. Cotton, corn, and soybeans are also significant items, as are chemical fibers.
Chinese imports of American cotton have declined sharply as China's own cotton harvests increased dramatically under the Deng Xiaoping-inspired policy of economic incentives. But China will probably have to continue to import American wheat for many years to come.
On the export side, textiles are China's most promising item. One of the major points of the Deng program was to reduce investment in steel and other heavy industry and to increase it in textiles and light industry. These industries employ large numbers of people and yield returns much sooner than does heavy industry.
The new policy has brought prosperity to the countryside, and increased both the demand for and the supply of consumer goods. As China's domestic economic situation has improved, so has its demand for foreign machinery and equipment to modernize its factories and improve its transport facilities.
But China can pay for these imports only if its exports also grow, and here China is in the classic position of newly industrializing nations. It is in textiles and light-industry products that China's export advantage lies. To try to curb exports in these areas means, in Chinese eyes, to keep China from paying its own way in its modernization effort - and thus to seriously hamper that effort. This is why the Chinese seem so touchy on the textile issue, and why they accuse their negotiating partners of insincerity.
The US is basically sympathetic to China's modernization drive. Nor does it disagree with the Chinese thesis that Sino-American trade should be in balance. But textiles are a special case, seen not in the context of Sino-American trade, but rather in that of overall textile imports into the US.
In a larger context, textiles are a contentious issue between the developed nations and the developing ones. China is going to have textile negotiations with the European Community that will be just as tough - probably tougher - than its negotiations with the US. And although the US seems prepared to be somewhat more generous to China than to its major suppliers - South Korea, Taiwan, and Hong Kong - it cannot offer concessions to China so great as to upset negotiations already concluded with these three.
The textile industry in the US is in bad shape, and political pressure to curb imports from all sources is strong. Taiwan, South Korea, and Hong Kong have had to be satisfied with little more than a 1 percent increase in their exports to the US. The US is understood to have offered China something like 1.5 percent growth, and to be prepared to go somewhat higher, but not by much.
The Chinese demand for a 6 percent increase is not without foundation. It is what the US offers its ''secondary suppliers'' - those who do not export as much as the three ''primary suppliers,'' which account for 60 percent of all American textile imports. (China accounts for about 10 percent of US textile imports, and is thus in a special position between the primary suppliers and the secondary ones.)
An amicable solution remains elusive, but it is essential to the overall framework of Sino-American relations. The prerequisite is a willingness to see the other side's viewpoint at a time when the Reagan administration's ties with Peking remain delicate. It is hoped the Shultz visit will improve the climate in which a solution must be sought and found.