OUR STRATEGIC TRADING PARTNER?
HAWKINS, WILLIAM R.
OUR STRATEGIC TRADE PARTNER? by William Hawkins President Clinton announced on June 3 that he would again waive the law and grant a one-year extension of China's "normal trade relations" (NTR)...
...are modernization and self-sufficiency of China's industrial and military sectors...
...Chinese purchases have spanned the entire spectrum of weapons systems, but the emphasis has been on improving air, missile, and naval capabilities in order to project power around the Pacific Rim—that is, toward American allies...
...And the Chinese hoard of dollars is tempting other countries, including some in NATO, to do military deals with Beijing...
...Indonesia, Malaysia, and Thailand have had to make major cuts in their defense programs (including cancellation of American equipment orders...
...Clinton was required by law to make his announcement on trade relations with China by June 3, and as soon as the Cox Report outlining Beijing's threat to U.S...
...A Financial Times editorial on May 26 called on Washington to be "tough on security and positive on trade...
...2) An enormous amount of militarily valuable "dual use" technology is transferred by American firms in the course of their normal operations in China...
...The axiom is that both parties benefit from trade...
...What business sees in China is not an export market, but a chance to profit from the development of Chinese capabilities...
...Proponents of "engagement" may talk of commerce as a vehicle of reform in China, but the fact is that capitalist democracies are far more open to foreign influence than are authoritarian one-party states...
...In truth, nothing could be more simple-minded (and self-serving) than to claim that economic activity is conducted in a vacuum and has no impact on the balance of power...
...The actual importance of the China market to the American economy is minuscule...
...1) China's trade surplus with the United States provides Beijing with the foreign exchange needed to buy foreign weapons and military technology...
...national policy makers...
...market, has undermined the economic stability of the Pacific Rim...
...China's national laboratories and the majority of China's military/industrial enterprises are located in this region, some of which are involved in foreign joint ventures...
...4) As transnational corporations form closer commercial alliances with the Beijing regime, China gains a strong voice in American domestic politics through the lobbying of business groups and the media...
...Commerce Department's Bureau of Export Administration found that "the underlying and stated objectives of China's foreign investment and trade policies...
...A recent study by the U.S...
...Even in a state of economic depression, Japan and the Pacific Rim provided an export market for American goods worth $142 billion in 1998, nearly ten times that of China...
...Clinton's waiver drew immediate applause from those who have economic interests in China...
...Thus, Clinton, in his statement, called normal trade relations "good for Americans," adding, "our exports to China have quadrupled over the past decade...
...formed a joint venture to produce components for gas-turbine and jet engines that could be adapted to cruise missiles...
...Though officially these new engines will be for civilian use, the site chosen was a plant that produced engines for cruise missiles...
...Business and Industry Council in Washington, D.C...
...hightech firms seem willing to pay the price—technology transfers—in exchange for limited market access...
...Across the region, joint exercises with the U.S...
...As Princeton's Kent Calder has observed, with Russia holding the greatest military yard sale in history, "the Chinese, flush with hard currency from their soaring, multi-billion-dollar transpacific trade surpluses, stocked up...
...Within a year, it moved from a trade deficit to a trade surplus...
...Commercial Technology Transfers to the People's Republic of China" confirms this, noting: "The majority of industry representatives interviewed for this study clearly stated that technology transfers are required to do business in China," and, "U.S...
...Ending the "normal" trade status of a China whose behavior is far from normal would give the trade advantage back to our friends and allies...
...Paul Kennedy has noted that "the more China pushes forward with its economic expansion in a Colbertian, etatiste fashion, the more likely that development will have power-political implications...
...In spite of the serious controversies that have arisen between the U.S...
...They all export similar products: labor-intensive manufactured goods such as footwear and apparel, electrical machinery, computers, consumer electronics, and toys...
...Trade with America facilitates a pro-China shift in the Asian balance of power in four major ways...
...Russia has been the main source for arms...
...This was an increase of only $5.5 billion over 1993...
...On Asia's other flank, South Korea has done the same...
...It is these implications that must be the concern of U.S...
...As export-led strategies collided, world prices for manu-lactured exports started to fall in 1996...
...Two days later, the Journal of Commerce asserted, "The simple fact is that the overall issue of trade with China is largely separate from the troubling defense issues...
...goods exported to the rest of the world increased by $204 billion...
...The U.S.China Business Council, which claims "300 leading companies" as members, released the following statement: "The U.S.-China Business Council believes that this year ought to be no different...
...The USA*Engage Web site, which claims to speak for over 500 firms, drools over China's ten-year plan for $750 billion in domestic infrastructure projects...
...China and the Pacific Rim states are direct competitors...
...Moreover, supporters typically exaggerate the economic benefits of trading with China...
...market is financing a military buildup that threatens the balance of power both in Asia and beyond, as China extends to rogue states in other parts of the world the technology it acquires...
...3) China's aggressive export strategy, encouraged by easy access to the U.S...
...and China in recent weeks, the economic relationship of the two nations brings benefits to both, and under-girds all aspects of the broad U.S.-China engagement...
...The Philippines needs economic expansion to finance the modernization of its anemic armed forces in the face of Chinese expansion in the Spratly Islands...
...military are being cut back...
...Instead of feeding the ambitions of Chinese mercantilists, American trade should follow the American flag...
...Though media attention has focused on a few sensational cases, such as the Loral/Hughes satellite-launcher scandal, technology transfer is an everyday occurrence...
...With characteristic verbal ingenuity, the president used “quadruple” to give an impression the figures do not warrant...
...The Bureau of Export Administration also found that "China's investment policies are geared toward shifting foreign investment into the central and western parts of China...
...security system on the Pacific Rim, Japan and the Association of South East Asian Nations...
...The cost of meeting that threat—not to mention the cost of failing to meet it—swamps the private commercial gains in scale and importance to our country...
...Beijing's economic policy conforms with the doctrine of Jean Baptiste Colbert, the mercantilist finance minister of Louis XIV who believed that "trade is the basis of finance, and finance is the sinew of war...
...by William Hawkins President Clinton announced on June 3 that he would again waive the law and grant a one-year extension of China's "normal trade relations" (NTR) with the United States...
...In 1998, the United States exported only $14.3 billion worth of goods to China, barely 2 percent of American exports...
...Open access to the U.S...
...William R. Hawkins is a visiting fellow at the U.S...
...During this same five-year period, U.S...
...Thanks to Washington's unconditional grants of most-favored-nation trade status, China was able to double its share of the American market in many sectors at the expense of the Rim...
...Most important, since the already vulnerable Japanese banks have invested heavily in Southeast Asia, the region's economic fragility undermines both anchors of the U.S...
...This increase in China's strength poses a threat to American national interests...
...For example, Pratt & Whitney's Canadian unit and China National South Aeroengine & Machinery Co...
...China gained an edge on its trade rivals by devaluing its currency in 1994...
...The Bureau of Export Administration's report on "U.S...
...American firms know that only by supporting an appeasement policy in Washington that hobbles efforts to respond to Chinese provocations can they maintain a "friendly" environment hospitable to their interests in China...
...By 1997, many of the Rim economies saw their current accounts deficits reach crisis levels...
...security was made public, on May 25, the business press started damage control...
...This hard-currency surplus gave China $58 billion in 1998 and $215 billion since 1994...
...But in the case of trade between American corporations and the Beijing regime, the gain to the corporations takes the form of private profit while the gain to the regime is an increase in its military-industrial capabilities...
...Maintaining NTR with China," he said, would "promote America's economic and security interests...
Vol. 4 • June 1999 • No. 38
