The United States has nothing to fear from the rise of China as a low-cost
manufacturing power and should concentrate on further growth in high-value
industries, Commerce Secretary Carlos Gutierrez said Friday.
At a time of mounting friction over a $202 billion trade deficit with China,
Mr. Gutierrez said United States unemployment was declining and wealth
increasing even as imports from China rise.
"Our economy is growing, and the average take-home pay per American is
increasing," he told a business forum in Tokyo.
On Wednesday, Mr. Gutierrez issued a blunt warning during his visit to
Beijing that rising protectionism in Washington could hurt China if the country
failed to open its markets further to American products.
The two messages highlighted the fact that Washington is more concerned with
what it perceives as Beijing's unfair trade practices than with the growing
might of China's manufacturing industry.
The Bush administration and American manufacturers have long complained that
China keeps its currency, the yuan, undervalued to give its exporters a
competitive advantage.
They also argue that a broad range of regulatory barriers, subsidies and
rampant theft of intellectual property restrict United States exports to China,
contributing to the ballooning deficit.
The European Union joined Washington on Thursday in confronting China at the
World Trade Organization over tariffs that Beijing places on auto part imports.
This trade gap is now one of the major irritations in what senior United
States officials describe as the most important global economic relationship of
the 21st century. It seems certain to be a source of contention when President
Hu Jintao of China visits Washington in April.
Some trade specialists maintain that United States and European Union
manufacturers have little choice but to surrender low-cost manufacturing to
China.
"For the time being, the strategy for developed countries is to go further
into new-generation technology and value-added products," said Yan Lan, a
Beijing-based specialist on international trade with the French law firm of Gide
Loyrette Nouel.
Senior United States trade officials acknowledge that trade between China and
the United States is complex with benefits to each side.
"The United States draws significant benefits from our commerce with China,"
Mr. Gutierrez said Wednesday in a speech in Beijing after he held talks with
senior Chinese leaders. "Our consumers gain additional choices and many American
companies are operating profitably in China."
Senior Chinese officials argue that some critics of the United States trade
deficit fail to recognize that a significant proportion of Chinese exports of
manufactured goods are shipped by subsidiaries of American companies or
subcontractors.
And they note that the value to China of these exports was often limited to
inexpensive labor, materials and packaging — while the high-value returns from
design, marketing and retail sales were earned in the United States.
Despite continued American frustration over the deficit, there are signs that
some of this tension could ease.
Two of Beijing's most strident critics in the Senate, Charles E. Schumer,
Democrat of New York, and Lindsey Graham, Republican of South Carolina, this
week delayed plans for a bill that would have required heavy tariffs on Chinese
imports if Beijing failed to let its currency rise in value against the dollar.
After a weeklong visit to China last month, both lawmakers said Chinese
officials had expressed willingness to allow the yuan to appreciate and tackle
other barriers to United States exports.
The yuan did rise this week, albeit incrementally, and it finished the week
at its highest level since July, when it was partly released from a peg to the
dollar. The dollar eased to 8.0175 yuan on Friday from 8.027 yuan on Thursday,
adding to a gain for the yuan of about 0.5 percent since early February.
Some trade specialists suggest that trade tensions can also be expected to
ease if both sides recognize that they have a lot to gain from cooperation
rather than conflict.
Mr. Gutierrez said Friday in Tokyo that China and the United States were at
different stages of development and not competing head-on.
"China has built its economy on the basis of manufacturing of commodity-type
products," he said. "What we have seen in the U.S. is that our new jobs that are
being created are in the area of higher-value manufacturing, differentiation of
products, higher technology and in many cases new services."
To remain competitive, he said the United States would need to improve
education and encourage research and development.
He suggested that China would eventually need to follow the same
path.