Rising Sino-US trade gap hurts US tech firms

Agence France Presse

Washington, January 12:

The burgeoning US trade deficit with China is beginning to impact American hi-tech industries, once believed immune to lower-wage Chinese competition, a report for a US Congress-mandated commission said. Chinas exports of electronics, computers, and communications equipment, along with other products that use more highly skilled labour and advanced technologies were growing much faster than its exports of low-value, labor-intensive items such as apparel, shoes and plastic products, the report stated. The US-China Economic and Security Review Commission released the report yesterday showing China also rapidly gaining advantage in more advanced industries such as autos and aerospace products.

“Everyone knew we would lose jobs in labor-intensive industries like textiles and apparel, but we thought we could hold our own in the capital-intensive, high-tech arena,” said Robert Scott of US Economic Policy Institute, which prepared the report.

“The numbers were seeing now put the lie to that hope — as China expands its share even in core industries such as autos and aerospace,” he said. Scott calculated that 1.5 million American jobs had been displaced over the 1989-2003 period as a result of the growing trade deficit with China. The deficit increased 20-fold over the last 14 years, rising from $6.2 billion in 1989 to $124 billion in 2003. It is expected to have increased by over 20 per cent in 2004 to more than $150 billion, according to the study. “This deficit is impacting an ever-broadening segment of US manufacturing, including advanced technology industries like semiconductors once thought immune to lower-wage Chinese competition,” it said. The loss of jobs due to the deficit has more than doubled since China entered the World Trade Organisation (WTO) in 2001. All 50 states and the District of Columbia were hit by the job loss, with California, Texas, New York and Illinois among the worst hit. Commenting on the report, Commission chairman Richard DAmato said the data could help the panel assess the impact China was having on American economic health and national security.

“This report makes an important, groundbreaking contribution to developing that understanding,” he said. Scott said “the assumptions we built our trade relationship with China on have proven to be a house of cards.”

US concerns on product piracy in China


US secretary of commerce Donald Evans began a visit to Beijing today amid concerns by the Bush administration that China wasn’t doing enough to crack down on rampant product piracy. Evans, who will meet with Chinese leaders during his three-day trip, has said he will focus on learning what China is doing to fulfill promises to better enforce its intellectual property laws as a member of the WTO. He said that the US was concerned about the lack of significant criminal prosecutions despite China’s commitment.— AP