Trade war? A buying spree for cheap Chinese goods

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Last updated at: (Beijing Time) Monday, December 08, 2003

Trade war? A buying spree for cheap Chinese goods

The contents of Rose Casalino's shopping cart might provide a clearer picture of U.S.-China trade relations than Chinese Premier Wen Jiabao's New York visit this week.

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The contents of Rose Casalino's shopping cart might provide a clearer picture of U.S.-China trade relations than Chinese Premier Wen Jiabao's New York visit this week.

While talk of a possible U.S.-China trade war was heating up in diplomatic circles recently, Casalino was shopping for her goddaughter at a Target store in the New York City borough of Queens.

She bought a video-game joystick, a CD player and a bathrobe, and eyed a Barbie doll mattress. All the products were high in quality and inexpensively priced, she said.

And unbeknownst to her, all were made in China.

"If I can afford it, I'll buy it," Casalino said. "I don't pay attention to where the products are made. I really don't."

Her shopping habits show the voracious American appetite for cheap foreign goods.

It's this hunger that makes the chances of U.S.-Chinese trade tensions escalating into an all-out trade war more diplomatic myth than economic reality, economists say. American shoppers -- who are also voters -- would not allow Washington to bar Chinese goods from U.S. shelves, the economists say.

"There will be no turning back the clock," said John Lonski, chief economist for Moody's investor service. "American consumers would react so negatively that it's all but an impossibility."

According to U.S. government figures, China exported $108.6 billion worth of goods to the United States in the first nine months of this year. In contrast, U.S. companies sold only $18.9 billion worth of goods in China.

This huge imbalance is at the heart of the trade dispute between the two countries.

Tensions rose last month when the United States capped some imports of Chinese textiles and imposed tariffs on televisions. China responded by delaying trips to shop for U.S. commodities and threatened duties on some American goods.

During his upcoming visit to Boston, Washington and New York, the Chinese premier is expected to address -- in addition to the trade friction -- a political dispute over U.S.-backed Taiwan and its call for independence.

The Taiwan issue may indeed heat up, but it is the trade imbalance that has the most implications for U.S. domestic politics, Morgan Stanley economist Stephen Roach said.

"It's not a coincidence that Washington is leaning toward restricting access to foreign imports at a time when the job situation is tough and a presidential election is heating up," Roach said.

Democrats are likely to try to use the significant job losses during the Bush administration as a trump card against Republicans in next year's elections.

Manufacturing groups and politicians have criticized China's fixed currency policy, arguing that the yuan's peg to the U.S. dollar is too low, making Chinese exports unfairly cheap at the expense of hundreds of thousands of U.S. manufacturing jobs.

Still, these cheap exports dominate the racks and floor displays of U.S. retailers. A DVD set, a CD stereo and a karaoke machine greet customers entering a Best Buy store in Queens, New York. All the products were made in China.

"I did actually glance at a TV set to see if it was made in the U.S.," shopper Artie Benanti said. "But in the end it doesn't matter."

Benanti, an education salesman looking for a high- definition television, said he didn't want to take American jobs away. But his choice between a domestic or a foreign product comes down to a simple factor.

"I want the better bargain," he said. (Source: Reuters)

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