US gains more from trade
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China held $906.80 billion in US Treasury bonds by October 2010 despite the global financial crisis. Rather than dumping the bonds, China increased its holdings, which effectively promoted the stability and liquidity of the US market and played an important role in easing its credit deflation.
The development of Sino-US commercial cooperation is a natural result of the deepening of the global labor division system. In this process, the strengths of the US in management, technology, capital and innovation have been consolidated by means of Chinese labor and the huge market in China. Partnering with China undoubtedly creates better conditions for the US to divert its industries toward high value-added fields.
China's controversial trade surplus with the US doesn't mean that US interests are harmed. A 2010 report by the Cato Institute, a Washington-based think tank, points out that it is the US that benefits the most from Sino-US trade. For example, Chinese manufacturers only make $4 from each iPod made in China, which retails for $299 in developed countries.
As for the heated debate over the valuation of yuan, China's surplus in its trade with the US increased considerably from 2005 to 2008, during which the yuan appreciated by 21.2 percent.
US protectionism is another nagging problem affecting Sino-US trade, and one that also hurts the US. The US government levied a special protectionist tariff on tires imported from China in 2009. The US tire industry lost 10 percent of its jobs in the first five months of 2010.
If it lifted its ban on high-tech exports to China, the US would benefit. China's imports of high-tech products jumped from $64 billion to $309.85 billion from 2001 to 2009, with an average annual increase of 48 percent. However, the US proportion of China's high-tech imports dropped from 18.30 percent in 2001 to 7.5 percent in 2009.
China and the US are complementary, which provides Sino-US commercial cooperation with a solid foundation of mutual benefits. China's opening-up and reform during its 12th Five-Year Plan (2011-2015) period not only entails a broad structural transformation, it will also release tremendous capital and consumption space for US enterprises.
A healthy and constructive Sino-US commercial partnership is necessary for stronger bilateral ties and, more importantly, crucial for a robust global economic recovery and sustainable world development.
The author is a People's Daily reporter. The article was carried by People's Daily on Monday.
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