BIZCHINA / Worldwide Reaction
'Transplants' a way for China to work with US
By Anita Y.Tang (China Daily)
Updated: 2007-06-15 14:57
The author Anita Y.Tang is managing director of Chicago-based Royal Roots
Global Inc, a US-China business advisory firm
Thinking beyond China's cheap labor producing cheap export goods and
giant trade imbalances, Chinese companies putting down roots in the US
market could well produce great mutual benefits.
When Chinese Commerce Minister Bo Xilai addressed business and government
leaders at a Chicago Council on Global Affairs luncheon in Chicago May
31, his emphasis on a China-US "joint effort to win" received an
enthusiastic response.
He spoke at a time when some US politicians and labor unions blame China
for taking away manufacturing jobs and say that the US$232.5 billion
trade deficit with China is caused by the undervalued yuan.
At the same time, it is also widely recognized that US consumers have
greatly benefited from low-cost Chinese imports to maintain their high
standard of living.
And China's surge in "going out" is having some positive effects on that
trade deficit. In May, a large Chinese procurement delegation toured 25
US cities and signed deals with US companies worth US$32.60 billion. This
sum equals 14 percent of the 2006 trade imbalance between the two
countries.
In today's division-of-labor global economy, however, the US will not be
able to balance its payments with China on the trade front, especially
with its tight restrictions on high-tech exports to China.
Instead, it is apparent that the US should look at other options that
will improve its trade position.
Some insight into these options was provided in Washington last month
during the second session of the Strategic Economic Dialogue between the
United States and China.
US Treasury Secretary Henry Paulson's closing statement summarized: "The
United States and China understand that getting our economic relationship
right is vital not only to our people, but to the world economy. Our
relationship works best when it produces mutual benefits, which lead to
growth, balance and a stronger global economy."
The mutual benefits desired can come, in part, from China's vigorous
efforts to transform its manufacture-based economy into one that is more
diversified and capable of competing in the fast-changing global economy.
For example, to diversify the country's US$1.2 trillion foreign exchange
reserve holding, China's State Investment Co signed an agreement to take
a US$3 billion equity position in US private equity Blackstone Group.
Related readings:
Penalizing China to hurt US
Wuhan Steel: US allegations of dumping unfair
US export controls have small China trade impact
China's growth, stability vital for all nations
And, at the May 15 Chinese Enterprises Outbound Investment Conference in
Beijing, Zhang Xiaoqiang, vice-minister of the National Development and
Reform Commission, indicated that Chinese government entities will
provide diplomatic, foreign exchange, tax, customs, credit, insurance and
other support to Chinese overseas investment in targeted industries.
The US economy will benefit from Chinese investment. It will create jobs
for Americans, increase purchases of goods and services from US
businesses, raise tax revenues at different levels of the US government.
Chinese investment in the US will also benefit China. It will help in
gaining market access and market intelligence, acquiring a skilled
workforce and management talent, brand recognition and profits.
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