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Huge Profit Opportunities Seen in China After PNTR
US business leaders, solidly behind expanded trade with China, have been all but salivating lately as they contemplate the massive profits they say await them in a nation of 1.3 billion people hungry for airplanes, computers, insurance coverage and pork.
"Do the math," says US Chamber of Commerce president Thomas Donohue in Washington, commenting on the upcoming congressional vote on permanent normal trade relations (PNTR) for Beijing.
"Nearly 1.3 billion people live in China, 20 percent of the world's population. But their economy only produces three percent of the world's goods and services. They have only seven percent of the arable land. This trade agreement opens that market to American businesses, workers and farmers."
Implementation of a landmark US-China trade deal signed last November, which would slash Chinese tariffs on US industrial and agricultural goods by 50 percent or more over a period of five years, depends on congressional approval of PNTR for Beijing.
With PNTR status, China would enjoy the same low-tariff trade privileges the United States accords to just about every other country in the world.
If the House of Representatives drops the ball and fails to back PNTR in a vote expected this week, the Chamber has warned, the United States will lose a chance to boost exports to China by 13 billion dollars in the next five years.
The value of US exports to the Chinese market has shown tepid growth since 1988, increasing from around five billion dollars to just under 20 billion dollars last year.
Washington's stubborn trade deficit with China, its fourth largest commercial partner, last year widened to 56.9 billion dollars.
As debate over PNTR intensified in Congress, where a substantial number of Democratic lawmakers -- backed by organized labor -- oppose the measure, US corporate representatives have gone before committee after committee, bearing thick reports and charts showing how much the trade deal will mean to them.
For example, John Hardin, a pork producer from Indiana and a past president of the National Pork Producers Council, revealed that the Chinese eat more pork than any other national population.
China in fact accounts for about 50 percent of all the pork consumed worldwide, according to the Council.
"Even a modest increase in Chinese pork consumption would amount to twice the total 1998 US pork exports," he said.
In addition to eating more pork, the Chinese are projected to need 1,800 additional commercial airplanes over the next 20 years, worth 125 billion dollars, according to the Aerospace Industries Association.
The United States exported 3.73 billion dollars' worth of aerospace goods to China in 1998, generating roughly 45,600 US jobs.
The High-Tech Industry Coalition on China has told the House Ways and Means Committee that China in 1998 was the world's 12th-largest market for electronics exports, which were valued at more than three billion dollars.
The Chinese market for semiconductors, expected to become the world's third largest this year after Japan and the United States, is already worth an annual eight billion dollars.
And by 2003, China will be the third largest outlet for personal computers after the United States and Japan, with more than a million Chinese citizens planning to buy a computer in the next two years, according to the International Data Corporation.
Software producers, too, want a piece of the action in China, where the market is growing by 30 percent a year and was worth 1.75 billion dollars in 1998, Business Software Alliance president John Chen told Congress.
"When you reflect on the fact that the number of Internet users in China quadrupled during 1999 alone -- and is expected to more than double again by the end of the year -- it us understandable why the Chinese demand for computer software of all kinds is growing by leaps and bounds."
"Virtually unlimited" is how the American Council of Life Insurers describes the 10 billion dollar insurance market in China, which has one of the highest individual savings rates in Asia yet spends less on insurance than 28 American states.
Arguing for passage of PNTR administration officials have avoided putting a figure on the number of new US jobs that expanded trade with China would create.
That's because employment rates are affected by interest rate policies rather than trade, explained Cato Institute analyst Daniel Griswold.
While some labor intensive jobs will be eliminated with PNTR for China, the losses will be equaled by new high-tech positions, leaving the net effect on the US labor force "negligible."
"Trade is not about creating more or fewer jobs," he said. "It's about creating better jobs."
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