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The Misleading Sensibility
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The huge US trade deficit with China has been a thorny issue in the bilateral economic relations in recent years.

Inexpensive Chinese products help Americans reduce their spending, curb their inflation and trim their budget deficit. But it seems that sensibility, instead of sense, shapes their judgment on the issue.

For Americans, job losses caused by the foreign competition and price hikes caused by imports restriction bring them different feelings. The assertion that competition from low-end Chinese products leads to job cuts or even bankruptcies in American businesses ignites and sharpens particularly strong sentiment among people affected and media sensationalism sharpens that mentality.

However, it takes time for the market to respond to imports limits by raising prices. In addition, the extra costs will be shared by all consumers. Therefore, the majority of the public have more tolerance toward slight price rise than blue-collars do for losing jobs. American medium and small-sized enterprises which fail in the market competition regard Chinese products as their threat.

That is why the voice of criticism against China is so loud in the US. But the fact is that even if the US restrains Chinese products, products from other countries will go in as well.

The sensibility also influences the US politics. Some senators without fully understanding about the Sino-US trade take China as a scapegoat to win votes. Multinational giants which are making huge profits in China and supported China's WTO accession keep silent on this issue for fear of being labeled as "non-patriotic" although what they really want is further prosperity of the bilateral trade.

China's export structure also leads to the misleading sensibility of Americans. Most Chinese exports are daily necessities. For American consumers, they see so many "Made in China" in supermarkets. In 2004, out of the US imports, 81 percent of sports equipments, 68 percent of shoes, 42 percent of furniture, 22 percent of electronic equipment, and 20 percent of garment were from China.

But actually Chinese products only accounted for 14 percent of the total US imports. If spending on food and energy is not counted, Made-in-China only cost 2 percent of American's consumption.

There is a view in the US which attributes China's fast growing economy for years to its trade surplus with the US. The robust economic growth has reinforced its national power. Some Americans are inclined to politicize economic issues especially when China invests a part of its trade surplus in the US treasury bonds.

Americans have trade liberalization and open market on their lips --- on the condition that their own interests are not affected. That has been exemplified by their trade disputes with the EU and Japan. Free trade always gives way to trade protectionism and the pursuit for material interests prevails. Countries which dwarf the US with their products then become a "threat".

Media is always ready to join the bandwagon in this case. All of these have resulted to sensibility outgrowing sense, leading to oversight of the US responsibility for erasing the imbalanced trade and ignorance of the truth of the trade --- reciprocity.

(People's Daily Online May 11, 2006)

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