2016年-PIIE彼得森国际经济研究所_China_Bashing_2004_53页_1mb

Summary of "China Bashing 2004"

Core Content

This policy brief discusses the US-China trade relationship in the context of the 2004 presidential election, focusing on the political and economic tensions surrounding China's trade practices, particularly its currency policy and labor standards. It analyzes the broader implications of the US trade deficit with China, challenges the narrative that China is solely responsible for job losses in the US manufacturing sector, and evaluates the feasibility of using international trade mechanisms like the WTO to address these issues.

Main Points

• US-China Trade Deficit:
  In 2003, the US-China trade deficit reached approximately $125 billion. However, the brief argues that this deficit is not the main cause of manufacturing job losses in the US, as other factors such as economic weakness and productivity growth also play significant roles.

• Trade Deficit and Macroeconomics:
  The US trade deficit with China is part of a larger global imbalance. The trade deficit is attributed to low national savings and high federal budget deficits, not just China's trade policies. The brief highlights that the US current account deficit in 2003 was $542 billion, with China's trade surplus accounting for only 2.5% of its GDP.

• China's Economic Role:
  China has become a major player in global trade, surpassing Japan as the third largest importer and the fourth largest exporter in 2003. Its growing demand for commodities, such as oil and nickel, has had a positive impact on resource-exporting countries like Canada and Australia.

• China's Trade Openness:
  China's trade-to-GDP ratio was about 56% in 2002, significantly higher than Japan's (22%) and the US's (13%). This openness is further reflected in its FDI-to-GDP ratio, which stood at 35% in 2002.

• Exchange Rate Policy:
  The brief examines the claim that China's undervalued renminbi is an export subsidy. It argues that this claim is not well-supported by WTO rules, as the renminbi's undervaluation is not a "specific" subsidy, and the WTO is not the appropriate forum for addressing exchange rate issues.

• Section 301 Petition:
  The Fair Currency Alliance (FCA) and the AFL-CIO have filed petitions against China's trade and labor practices. The FCA petition claims that China's trade statistics underreport its surplus, while the AFL-CIO petition focuses on labor rights and wage stagnation.

• Impact of Renminbi Revaluation:
  A 20% revaluation of the renminbi could reduce the US-China trade deficit by about $20 billion, but the actual impact would depend on price elasticities and the broader context of global trade dynamics. The brief estimates that the potential improvement in the US trade balance could be as high as $56 billion if accompanied by improved US savings and investment balances.

• Challenges of WTO Action:
  The brief suggests that a WTO case against China's exchange rate policy is unlikely to succeed. The WTO's focus is on trade rules, not financial policies, and the US-China trade deficit is largely influenced by macroeconomic factors beyond the scope of WTO regulations.

• Conclusion:
  The brief recommends that the US Treasury should pursue a more discreet and diplomatic approach to pressuring China for renminbi revaluation, rather than engaging in high-profile legal actions. It argues that public confrontation could provoke backlash in China without necessarily leading to meaningful policy changes.

Key Information

• US-China Trade Statistics (2003):

  • US imports from China: $152 billion
  • US exports to China: $27 billion
  • Bilateral trade deficit: $125 billion

• Trade Deficit and Job Losses:

  • The US trade deficit with China is not the primary driver of manufacturing job losses.
  • The trade deficit with the rest of the world is a more significant factor.
  • Manufacturing job losses are attributed to economic recession and productivity growth, not solely to China.

• Renminbi Revaluation Estimates:

  • A 20% revaluation of the renminbi could reduce the US-China trade deficit by $20 billion.
  • An optimistic estimate of the trade balance improvement, assuming revaluation and improved US savings, is around $56 billion.

• WTO and Exchange Rate Issues:

  • The WTO is not the appropriate forum for addressing exchange rate policy.
  • The US-China trade deficit is influenced by macroeconomic factors, not just trade rules.

• Labor Standards and Wages:

  • The AFL-CIO petition argues that China's labor practices are unfair and that wage increases could reduce the trade deficit.
  • However, the brief counters that Chinese wages have increased significantly (179% from 1992 to 2002), and that the US-China trade deficit is not directly linked to wage levels.

Appendices and Tables

• Appendix Table 8: Shows that the US trade deficit with China does not correlate with declining manufacturing output, as trade deficits often coincide with higher production.

• Table 1: Lists China's merchandise trade balance with selected partners in 2003, highlighting the significant trade deficit with the US.

• Table 2a and 2b: Provide detailed trade statistics, including the impact of reexports through Hong Kong on the trade balance.

• Table 3: Offers adjusted estimates of US-China merchandise trade from 1999 to 2003, showing the growing trade deficit.

• Table 4a and 4b: Lists major US exports and imports to and from China in 2002, highlighting the sectors most affected by trade imbalances.

• Table 5: Compares China's export growth with other Asian economies, showing that its growth rate is lower than Japan's but still significant.

• Table 7: Indicates the potential impact of renminbi revaluation on the US trade balance, depending on how many Asian currencies follow suit.

• Table 8: Summarizes different views on the extent of renminbi undervaluation, with estimates ranging from 10% to 40%.

Conclusion

The brief concludes that the US-China trade deficit is a complex issue influenced by macroeconomic trends and global trade dynamics. While China's exchange rate policy is a point of contention, the US should pursue a more nuanced and diplomatic approach rather than relying on legal actions in the WTO. The political pressure to "bash" China is often exaggerated, and a more constructive dialogue could lead to better outcomes for both countries.