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China and U.S. Urged to Work More Closely

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By George E. Curry
NNPA Editor-in-Chief

WASHINGTON (NNPA) – With China and the United States on track to become each other’s largest trading partner by 2022, leaders of the nation’s two largest economies need to work more closely to remove barriers that hamper trade between the world’s most influential countries, according to a new report by the China-United States Exchange Foundation.

The report, “US-China Relations in the Next Ten Years: Toward Deeper Engagement and Mutual Benefit,” was released here last week at a forum at the Center for Strategic International Studies (CSIS). In addition to trade, the two countries have a special responsibility to exert leadership on other global matters, according to scholars from both countries who worked on the study.

“The fact is whether it is energy security, food sufficiency, protection of the environment, climate change, nuclear weapons proliferation, fighting terrorism, preventing epidemics or drug trafficking, all of these and other transnational challenges that the world faces today require multilateral efforts,” C.H. Tung, chairman of the China-United States Exchange Foundation, wrote in the forward to the report. “But if the U.S. and China work together on any of these issues, the chances of success will be enhanced. It is for all of the above reasons that from a global perspective, the U.S. China relationship is the most important bilateral relationship today.”

The Hong Kong-based China-United States Exchange Foundation was created to encourage closer cooperation between China and the U.S. The two countries did not establish diplomatic relations until 1978, when Richard Nixon made the historic trip to Beijing.

“Trade between the U.S. and China has grown by leaps and bounds since 1978,” the report stated. “According to Chinese official data, Chinese goods and services to the U.S. grew from US $9.65 billion in 1992 to US $446 billion in 2012. According to U.S. official data, the corresponding numbers are US $27 billion and US $446 billion.”

The report notes that the two economies are “different and complementary.” The United States is the wealthiest and most technologically advanced country in the world. China, still rapidly developing, has the largest population in the world with 2.2 billion people – more than four times the population of the U.S.

According to projections, China’s middle class is expected to grow over the next decade to 600 million. To put that in perspective, China will have more middle-class citizens than the rest of the world combined.

“The rapidly rising demand by the Chinese middle class will provide the stimulus for growth not only for China, but for the U.S. and the rest of the world,” the report stated. “That demand will come not only from the increased size of the middle class, but from the rise –from the very low levels – of Chinese consumption as a share of GDP.”

As China continues to lose low-cost factory work to Bangladesh, Cambodia, Indonesia, Vietnam and Myanmar, its leaders have turned to increasing consumption as the primary tool to grow the economy.

If China is successful, it will make “the world’s factory” also “the world’s market.”

And some U.S. companies – including GM, the leading auto manufacturer in China; Ford, McDonald’s, KFC, Wal-Mart, Procter & Gamble, Federal Express, and Starbucks – had the foresight to go after the huge market and are now household names in China.

“China is today the largest importing nation of agricultural products in the world,” the report said. “The U.S. is China’s largest supplier of agricultural products and China is the largest market for U.S. agricultural products…China is not likely to be able to meet its additional demands in the years ahead through increases in domestic supply alone.”

If other changes are made, agricultural trade between the U.S. and China could double in 10 years.

“China currently imports pork, beef and chicken from around the world, but such imports from the U.S. have thus far been limited for the following reasons: First, imports of pork are limited because of the use of hormones by U.S. producers in raising the pigs which China, like the E.U., has banned. If an undertaking is given by U.S. producers that hormones will not be used, as has been done to the European Union, the Chinese market can be open to U.S. pork. Given the importance of pork in the Chinese diet, the potential demand can be huge.

“Second, imports of beef are limited because of the risk of mad-cow disease. However, as no new cases have been reported for some years, this obstacle can be overcome. Finally, the imports of poultry from the U.S. have become a victim of trade disputes between the two countries. It is hoped that the dispute can be settled soon.”

China is a major investor in the U.S. through its People’s Bank of China, which holds approximately $1.2 trillion in U.S. Treasury securities and another $1 trillion in U.S. portfolio investments. The report recommends attracting more Chinese investors, especially for infrastructure projects.

The relationship between China and the U.S. is not without its problems.

Tung wrote in his forward to the report, “… It is important to recognize that the relationship is constrained by mistrust and differences over strategic global issues. Also there are difficulties in the commercial relationship, such as cyber security, intellectual property protection and protectionism on trade and investments.”

He added, “Trust needs to be built, and differences and difficulties need to be managed and addressed. But under no circumstances should they be allowed to stand in the way of deeper engagement between the two countries.”

During a panel discussion at the Center for strategic & International Studies, Peter Seligmann, chairman and CEO of Conservational International, placed the U.S.-China relationship[ within a global context.

“In the next four decades, we’re going from 7 billion people to 9.5 billion or so,” he said. “We’re going to double the size of the global middle class, which means we’re going to double the amount of energy we need. We’re going to double the amount of fresh water we need. And we’re going to double the amount of food we need, all on a planet that is destabilized by climate shifts and ecosystems deterioration. That calls for intense, trusted collaboration between the United States and China as the two largest consumer agents.”

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