China, US Should Boost Bilateral Economic and Trade Links

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Last updated at: (Beijing Time) Saturday, July 20, 2002

China, US Should Boost Bilateral Economic and Trade Links

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China and the United States should make joint efforts to boost bilateral economic and trade relations. As early as 1794, the two countries began their economic and trade exchanges when the US commercial vessel "Empress of China" sailed to China for trade purposes.

For a long period before diplomatic relations were established in 1979 between New China and the United States, bilateral trade volume had been low.

From then on, the two countries have seen major advances in economic and trade relations, pushed by globalization and the economic complementarity of the two sides.

Huge discrepancies in the two countries' economic development levels, industrial structures and consumption patterns provide a solid foundation for their economic co-operation.

It is obvious that the ever-expanding economic and trade exchanges between the two countries play a pivotal role in the development of the two economies.

By conducting economic and trade exchanges with the United States, China can attract financial resources, technologies and management expertise, and at the same time expand exports.

Currently, the United States is China's largest exporting market. And China's exports to the United States are playing an increasingly significant role in US economic progress.

According to statistics released by the Chinese Government, China's exports to the United States accounted for 30 per cent of its total export volume in 2001, or 5.3 per cent of its gross domestic product (GDP).

On the US side, Sino-US economic and trade exchanges not only directly benefit its consumers and enterprises, but also have an important influence on its macro-economic growth.

US exports to China, which have now topped more than US$26 billion annually, have created 400,000 job opportunities for its workers. Also, a vast array of cheap commodities imported from China also directly benefit the lives of US citizens.

From a macroeconomic perspective, the rapid advancement of its economic and trade ties with China plays a propulsive role in the steady development of the US economy.

First, the rapidly-growing economic and trade ties with China will be a contributor to optimization of US resources allocation and adjustments in its industrial structure.

Second, taking advantage of growing trade with and investment in China, the United States has and can continue to share in the dividends from China's high-economic growth while the global economy has been inured in a deep slowdown in the wake of the 1997 Asian financial crisis. Through its investment in China's enormous market, the United States is able to use China as a forward base for its penetration into the Asia-Pacific region.

Third, it can effectively increase domestic total supply, suppress inflation to some extent, and create a relaxed macroeconomic environment for its economy, by importing a multitude of cheap daily consumer goods from China.

It is estimated that prices in the United States would increase by two percentage points if there were no Chinese-made consumer goods circulating through its markets.

Facts show that development of Sino-US economic and trade ties have been relied on the two nation's bilateral relations. But they can also stimulate the further advancement of bilateral relations between the two countries.

Obviously, the two countries can seek common benefits and development potentials from Sino-US economic and trade exchanges.

With the ever-increasing economic interdependence of the two countries, Sino-US economic and trade ties have become a stabilizer and accelerator of a healthy bilateral relationship between the two sides.

Since the end of the Cold War, economic factors have been exerting an ascending impact upon international relations and foreign policy decision-making processes. The deepening of economic interdependence between China and the United States has helped alleviate negative impacts on bilateral relations caused by security and political conflicts.

However, controversies between the two sides over security questions and human values are still likely to hurt bilateral ties.

Given the close economic links existing between them, the two countries pay a heavy price when their relations sour. Neither US statesmen nor businessmen can afford to underestimate China's role as the world's fastest economic growth area and largest potential market for the United States.

There is a consensus that normal Sino-US relations help create a good political environment for economic and trade ties, and that lengthy periods of political tension must inevitably be unbeneficial to economic and trade exchanges.

History convincingly indicates that smooth and rapid development of Sino-US economic and trade ties depends on the maintenance of normal bilateral relations.

Of course, the importance of Sino-US economic and trade ties must not be pushed out of proportion. Sino-US economic and trade exchanges will not automatically ease their political conflicts, nor they will meet with serious setbacks because of friction over political and security issues. At any rate, the impact of political factors on Sino-US economic and trade exchanges will inevitably weaken as mutual interdependence grows.

In fact, mutual interdependence has become one of the foundation stones supporting long-term, stable relations between the two countries.

With its entry into the World Trade Organization (WTO), China will be fully integrated into the global economic system, thus injecting a new vitality into Sino-US economic and trade ties.

It is normal that there will be some discord between China and the United States in economic and trade fields. And the number of problems is possibly on the rise with the deepening of Sino-US economic and trade interchanges.

Co-operation, however, will continue to be the core propelling force in Sino-US economic and trade ties.

More importantly, China and the United States have reached a consensus to establish a constructive co-operative partnership, which will be conducive to forming an ideal environment for bilateral economic and trade ties.

The author is deputy director of the China Institute of International Studies.

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