China Addresses Trade Surplus

China, responding to months of sustained pressure from the Bush administration to reduce its $103 billion trade surplus with the United States, will soon announce the purchase of billions of dollars worth of American goods, including airplanes, jet engines and auto parts, according to U.S. and Chinese trade officials and company executives.

While the purchasing announcements may influence trade politics in Washington, economists say they are not likely to be big enough to substantially reduce the U.S. trade deficit with China. The money would be spent over several years. Moreover, in the long term, the trade deficit largely reflects the movement of American manufacturing to China — a fundamental shift that is unlikely to reverse. Indeed, more than half of Chinese exports to the United States are produced by factories wholly or jointly owned by American companies, according to the China Council for the Promotion of International Trade, a government-affiliated group.

Those deals and others reflect China’s recognition that a trade war with the United States would be disastrous. The United States, the world’s largest consumer market, last year bought one-fourth of China’s exports.

The trade deficit is so large,” the official said. “China is really trying to solve this. There are many ways to do it, but one way is to buy more things from the United States.”

China’s strategy is based on the assumption that, as it develops and grows, it will continue to spend trillions of dollars buying goods from around the world. It needs cotton for its enormous textile industry, energy to power its factories and basic commodities such as copper and tin to supply its vast manufacturing enterprise. It cannot meet its own needs domestically, so it is going to spend its money somewhere. The expenditures amount to a form of political capital, favors to be dispensed and targeted strategically to cultivate and maintain geopolitical relationships.

China will soon send a delegation to the United States to purchase more American goods, Wan Jifei, Chairman of the China Council for the Promotion of International Trade, said at a news conference held by the US-China Business Council in Beijing. He said purchases would focus on telecommunications and aviation.

Whatever the political significance of the purchases of US products soon to be announced, major American companies could help solidify significant footholds in what many economists assume will eventually be the largest market for just about everything.

For more information, visit the China Council for the Promotion of International Trade’s website at www.ccpit.org.