Washington Council on International Trade
WCIT Policy Advocacy on China
WCIT recognizes that the U.S.-China relationship is challenging. When we discuss China policy with the Washington State Congressional delegation, we ask Members to keep the long-term relationship in mind, and the many benefits that our state receives from our engagement with China.
We fully support legislation that promotes greater U.S. competitiveness, cultural and educational exchange.
WCIT does not support specific legislative action to address currency valuation problems. The Department of Treasury is specifically mandated to handle this very complicated kind of issue.
China Trade Headlines
►U.S., China to Discuss New Support for Free Trade
AFP, July 28, 2009
►U.S., China Vow Closer Ties to Lead Global Recovery
Reuters, July 28, 2009
►Strengthen U.S. - China Trade Ties
Chen Deming, Wall Street Journal, April 27, 2009
►World Bank: China's Recovery Could Start This Year
The Washington Post, April 7, 2009
►The Financial Crisis Changes the China-U.S. Relationship
Paul Krugman, Seattle Times,
April 4, 2009
China - A Beneficial Trade Partner for Washington State
U.S.-China Working Group
The Washington Council on International Trade supports the U.S.-China Market Engagement and Export Promotion Act : Four bills to secure America’s economic future
China is on the rise—and is rising fast. It is the second largest economy in the world when measured by domestic purchasing power parity, and while the U.S. private sector long ago understood the gravity of China’s growth, our public sector lags behind.
The trade deficit with China continues to grow—but what are we doing to help our small and medium sized businesses export more goods and services to the China market? We need innovative programs that support our small business exports and arm them with the tools they need to succeed in China.
The Washington Council on International Relations supports the U.S.-China Competitiveness Agenda—four critical pieces of legislation to expand our diplomatic infrastructure in China, increase our support for small and medium sized businesses, boost domestic Chinese language programs and dramatically expand U.S.-China energy cooperation.
- H.R. 2310: The U.S.- China Market Engagement and Export Promotion Act
Key Highlights:
- Helps states establish and operate offices in China to promote exports.
- Creates a program establishing China Market Advocate Positions in US Export Assistance Centers around the country.
- Provides assistance to small businesses for Trade Missions to China.
- Authorizes SBA grants for Chinese business education programs.
- H.R. 2311: The U.S.-China Diplomatic Expansion Act
Key Highlights:
- Increased funding for public diplomacy with an emphasis on Internet communications
- Provides funds to build another consulate and establish 10 American presence posts
- Increased funding for State Department student exchange programs
- Increased funding for State Department teacher exchange programs
- Increased funding for Rule of Law Initiatives
- Increased funding for Asia Pacific Economic Cooperation
- H.R. 2312: The U.S.-China Energy Cooperation Act
Key Highlights:
- Authorizes a grant program to encourage joint American-Chinese research and development and policy education.
- Grants will fund joint energy and climate change policy education programs and/or joint research, development, or commercialization of carbon capture and sequestration technology, improved energy efficiency, or renewable energy sources.
- Entities eligible for grant funding are joint ventures comprised of both Chinese and American private business entities, joint ventures comprised of both Chinese and American academics or joint ventures comprised of Chinese and American Federal, State, or local governments.
- H.R. 2313: The U.S.-Chinese Language Engagement Act
Key Highlights:
- Increases Chinese cultural studies and language acquisition for American students through Local Education Agencies (LEAs).
- Supports collaborative efforts between LEAs and institutions of higher education and exchanges with academic institutions in China.
- Develops programs that include intensive summer Chinese language instruction, connecting Chinese and English Speakers and cultural studies.
U.S. - China Trade
Quick Facts
- Washington State has a trade surplus with China.
- Since 2006, China has been Washington State's largest and most rapidly growing export market.
- In 2007, total Washington State exports equaled $66.3 billion, representing an increase of nearly 25 percent from 2006, of this amount, more than $9 billion went to China.
- Washington is ranked as the second largest exporter to China nationally, only behind California.
- From 2000 - 2007, Washington State exports to China grew by 406 percent. By comparison, exports to the rest of the world grew by 87%.
Every Washington Congressional District Benefits from Trade with China
In every Washington State congressional district, exports to China grew by over 300 percent. The top five export categories were transportation equipment ($6.4 billion), crop production ($2.0 billion), computers and electronics ($292 million), waste and scrap ($223 million), and processed foods ($161 million). Transportation equipment represented 66.57 percent and crop production represented 20.39 percent of total exports to China for 2007.
| District | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | % Change 00-07 |
|---|---|---|---|---|---|---|---|---|---|---|
| 1st District | $1,052 | $1,479 | $2,096 | $1,330 | $1,174 | $2,268 | $3,309 | $4,437 | $3,295 | 213% |
| 2nd District | $1,242 | $1,759 | $2,484 | $1,614 | $1,437 | $2,722 | $3,946 | $5,323 | $4,108 | 231$ |
| 3rd District | $156 | $226 | $315 | $219 | $201 | $360 | $512 | $701 | $601 | 285% |
| 4th District | $201 | $437 | $492 | $764 | $792 | $902 | $1,043 | $1,792 | $3,071 | 1427% |
| 5th District | $104 | $190 | $234 | $273 | $272 | $354 | $440 | $700 | $998 | 856% |
| 6th District | $127 | $182 | $255 | $172 | $156 | $287 | $411 | $558 | $459 | 261% |
| 7th District | $641 | $901 | $1,278 | $808 | $712 | $1,380 | $2,015 | $2,700 | $1,992 | 211% |
| 8th District | $728 | $1,024 | $1,451 | $922 | $815 | $1,571 | $2,291 | $3,074 | $2,289 | 215% |
| 9th District | $746 | $1,052 | $1,489 | $955 | $847 | $1,621 | $2,357 | $3,170 | $2,399 | 222% |
Source: The US-China Business Council
* This study uses county-level export data to provide estimates of congressional district exports to China. Because some congressional districts include parts of the same counties, and because the county export data cannot be apportioned to the separate districts, the total of a state's estimated individual congressional district exports in this study may exceed the state's actual total exports to China.
Looking at the trade statistics, it's easy to make the case that China is an important trading partner for Washington State. Clearly our businesses are benefiting from doing business with their Chinese counterparts. With China's population of 1.3 billion and rapidly growing purchasing power, that is a trend that is likely to continue well into the future.
That is not to say that there are not challenges and concerns with the relationship. U.S. companies face problems with market access, a cumbersome regulatory environment, and numerous trade restrictions. Corruption and intellectual property theft are endemic throughout China. And the Chinese have moved slowly to address the problems with the undervaluation of their currency.
Because of the size of the Chinese economy and the rapid increase of the volume of bilateral trade between the United States and China, the problems in our trade relationship have created fears among some about the inability to compete and loss of jobs due to cheap Chinese labor. In the U.S. congress, bills and amendments are constantly being proposed that try to address specific elements of these problems. These are legitimate concerns, and they need to be addressed. But it is important to look at addressing our problems in the context of the overall relationship.
| Rank | Trade Partner Country | 2006 | 2007 | % Change 06-07 |
| Total | 53,074 | 66,258 | 24.84 | |
|---|---|---|---|---|
| 1 | China | 6,828 | 9,609 | 40.72 |
| 2 | Japan | 6,708 | 7,715 | 15 |
| 3 | Canada | 6,205 | 7,588 | 22.28 |
| 4 | India | 1,061 | 5,775 | 444.19 |
| 5 | South Korea | 2,494 | 2,990 | 19.88 |
Source: The US-China Business Council
Currency Undervaluation: It is important that the U.S. government keep the pressure on the Chinese government to bring its currency in line. But progress is being made. Since the Chinese switched from a peg to the U.S dollar to a basket of currencies in July 2005, the renminbi has appreciated almost 20%.
While upward pressure should continue, this appreciation has to take place gradually. The government shouldn't risk causing instability within the financial markets. China, like much of the world has experienced a high rate of inflation this year, which means their goods are more expensive. With the weak U.S. dollar, many importers are suddenly facing much higher costs for their products. If the Chinese were to appreciate their currency, this would add to these costs. That would mean that the trip you take with your kids to get clothes or school supplies would cost a lot more. So in the end, it's you, the American consumer that ends up paying these costs.
Congress, including our Washington delegation, is being lobbied by some to place punitive tariffs on all goods coming in from China because of the currency valuation issue. A tariff would mean that each good coming into the United States would cost more, as much or most of the cost of this would be passed on to the consumer. So maybe for awhile the notebooks that you buy at Wal-Mart would come from Indonesia or your new jeans from the Gap would come from Vietnam..but they would eventually be more expensive too because other countries couldn't handle the capacity long-term of this kind of disruption from an established supply chain. Most likely, your stuff would still come from China, you'd just pay the higher price. Again, this works out so it's the American consumers who pay the tariffs.
| Rank | Commodity | 2006 | 2007 | % Change 06-07 |
| Total | 6,828 | 9,609 | 40.72 | |
|---|---|---|---|---|
| 1 | Transportation Equipment | 4,817 | 6,396 | 32.77 |
| 2 | Crop Production | 1,024 | 1,959 | 91.23 |
| 3 | Computer and Electronics | 171 | 291 | 69.59 |
| 4 | Waste and Scrap | 263 | 223 | -15.31 |
| 5 | Processed Foods | 107 | 160 | 49.03 |
Source: The US-China Business Council
The Strategic Economic Dialogue
So what do we do? We continue to work on resolving these problems thru the U.S. China Strategic Economic Dialogue (SED). In 2006, President Bush and President Hu of China recognized that the fast growth of the bilateral relationship would create these kinds of problems. They agreed that a regular, high-level dialogue was necessary to keep working through difficult issues - as well as collaborate on long-term strategic issues to develop mutually beneficial initiatives (such as green energy cooperation) and avoid future conflicts. The SED meets twice a year - once in Washington, D.C., once in Beijing, to discuss economic and other strategic issues. The U.S. side of this meeting is Chaired by the Treasury Secretary. Participants include the National Economic Advisor, U.S. Trade Representative, Head of the Environmental Protection Agency, and Secretaries of Commerce and Energy, and their Chinese counterparts.
Upcoming Events
"U.S. Congress and China Trade Policy: Perceptions and Realities"
A Roundtable with Congressman Jim McDermott
Important Materials
"Debating US-China Trade Policy"
by Stephen S. Roach
"China's Trade with the United States and the World"
Congressional Research Service Report for Congress (pdf)
"Seven Myths about US-China Trade and Invesment"
The US-China Business Council (pdf)