The Bush Administration promised to counter surging Chinese imports with more protection for US manufacturers after companies complained to Congress about China's weak currency and the lax enforcement of US trade laws. According to Grant Aldonas, Under Secretary of Commerce, the Department will assign more employees to monitor Chinese companies for signs of unfair trade practices and will set up an office where small businesses can appeal to for help against Chinese imports (see related article on China hearing). China's record trade surplus with the US - $103 billion in 2002 - is partly a result of its undervalued currency. For instance, since 1994 the Chinese Government has artificially suppressed the value of the yuan in order to gain a competitive advantage. In doing so, the government has accumulated $280 billion in foreign exchange reserves - $75 billion last year alone. Imports from China are six times as large as our exports, and this bilateral trade deficit is now one-fourth of our global trade deficit. If these trends continue, within five years our deficit with China would more than triple to over $300 billion, according to the National Association of Manufacturers. Aldonas also was quoted as saying that "Were it not for Chinese government actions to prevent the currency from adjusting, the market would drive up the Chinese currency." He saw no signs, however, that the Chinese government was interested in doing so. Trade litigation between the US and China, which costs about $155 billion a year, has grown since China entered the World Trade Organization (WTO) in December 2001. China faces more trade-dispute cases around the world than any other nation. Domestic manufacturers in the US are particularly worried because China's production is quickly moving beyond the traditional areas of textiles, toys and footwear and into higher-technology production. Machinery imports from China are up nearly 50% in the last 12 months. NAM Looking Into China Problems Recently, a dozen NAM Board members met to discuss China. They all agreed that the global emergence of China was one of the top two issues facing US industry - the other being rising health care costs. They concluded that the NAM should develop an approach to China, and that it should be a positive approach that recognized China's importance as a customer as well as a competitor. They also agreed that smaller companies faced an especially serious challenge from China and that special efforts should be made to see how these companies could be assisted by private or governmental efforts. NAM has issued a series of steps that should be pursued to avoid future ballooning trade deficits with China. They include: · Pressing for China's full compliance with world trade rules; · Ending its currency undervaluation and having a market-determined currency; · Acting against product counterfeiting; · Acting against subsidies and dumping; and · Initiating a massive US export promotion program.
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