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Last updated at: (Beijing Time) Wednesday, August 27, 2003

A Sensible Voice: Commentary

In the past year, a strong agitation of "theory of Chinese products threat" and "theory of Chinese trade surplus threat" was stirred up by the US manufacturing industry and the media circle, with ulterior motives they first dubbed China a "world factory", then they imputed their own economic depression, the bankruptcies of their medium and small enterprises and the high rates of unemployment to the competition of China's cheap products. Due to the persistence and wide spread of this adverse current, the "theory of Chinese economic threat" was all the rage.


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In the past year, a strong agitation of "theory of Chinese products threat" and "theory of Chinese trade surplus threat" was stirred up by the US manufacturing industry and the media circle, with ulterior motives they first dubbed China a "world factory", then they imputed their own economic depression, the bankruptcies of their medium and small enterprises and the high rates of unemployment to the competition of China's cheap products. Due to the persistence and wide spread of this adverse current, the "theory of Chinese economic threat" was all the rage.

A latest US poll shows that 64 percent of American enterprises hold that the development of China into a powerful exporter poses a greatest threat to their survival. The American Manufacturers Association even hoisted the ensign of "rescuing US manufacturing industry", demanding "pulling the trigger of trade protectionism against China" and threatening with the "launch of another war".

People may wonder why such a sensational uproar would have its market. As a matter of fact, behind the uproar is the lack of strength for US economic recovery, these people need, therefore, to find a scapegoat. Secondly, the United States is getting near to the general election, the source of votes in the hands of trade unions has become the target of contention between the two parties. That's why "US-China trade has become an economic and political hot topic".

However, these specious hubbubs can only puzzle those who are unwilling to think carefully, but does not bear cool-minded analysis and careful consideration. The editorial titled "Who Is Afraid of China" carried in the US "Asian Wall Street Journal" in August seems to be helpful to those who go astray. The editorial points out bluntly: Many people agree that China is harming the United States through its mercantilist policy. But a just perfect analysis shows not only that such view is wrong, but also that free trade with China is absolutely beneficial to the Americans. Perhaps someone may ask: Isn't China's trade surplus with the United States of America a fact? The editorial says that the greatest reason for the trade surplus is nothing more than those companies which had long ago exported to the United States and have today moved their production to China. A survey shows that 75 percent of China's surplus exports to the United States are the result of the "effect of migration". That is to say, the commodities exported to the United States were previously produced outside the Chinese inland and then exported to the United States, but now these factories have moved to the Chinese inland and marked their products with the words "made in China". Therefore, these imported products are not different from previous ones for the United States.

In addition, many so-called "made in China" products actually are just assembled in China. The editorial takes computer for an example, it says that in 2002 the United States imported from China computer products worth US$13.2 billion, however, most of the advanced parts and components were imported by China from the United States and Japan, i.e., China imports parts and components from the United States, which, after assembled, are exported to the United States. This means that the United States has everything to gain and nothing to lose, because the shift of the production line to China for labor-intensive products and the assembly line for capital-intensive products does not generate any real influence on American products, on the contrary "it has enormously benefited the American consumers due to their low prices"; meanwhile, American companies have reaped extra profits as a result of their migration to or investing in the Chinese inland. So, to be fair, US shareholders and even the US economy have greatly benefited from China.

The editorial points out, Beijing is mainly concerned for its domestic economic growth rather than the increase of trade surplus. Whereas the repeatedly exaggerated trade surplus actually accounts for only 1.3 percent of the bilateral trade value. The editorial says in conclusion that if the United States and China allow their bilateral trade to continue to develop at high speed, then these two main engines in world economic development will each allow the other side to become more wealthy. This is really a rare fair editorial. Any unprejudiced person cannot but acknowledge the objectivity of its stand, its profound analysis and logical statement give people a sense of beholding the sun blazing forth from a cloudy sky. We propose those who are keen on propagating the so-called "theory of Chinese economic threat" earnestly read this sensible editorial, coolly make their own judgment and cease repeating what others say.

This commentary, written by Li Xuejiang, is published on page 3 of today's People's Daily.


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