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US-China trade ties deepen amid challenges

(Xinhua)
Updated: 2009-09-07 15:16

Jennifer Richmond, China director at Strategic Forecasting Inc, said recent protectionist rhetoric had more to do with the economic downturn than with the new administration.

The firm, a private global intelligence agency, is more commonly known as Stratfor.

Given this unusually harsh global economy, it is to be expected, Richmond added.

Many US economists say the United States is unlikely to return to its former level of profligacy - Americans have for years racked up considerable household debt and saved little, and this could decrease demand for China's exports, even when the US economy slogs towards a rebound.

Some have warned that China may not see the same strong demand for its exports as before, as Americans tamp down their consumerism and shy away from pre-recession tendencies to live beyond their means.

The intelligence expert suggested that China must create a more vibrant domestic consumer culture and reduce its reliance on exports in order to offset the effects of Americans' new frugality.

While China realized the need to do this, ramping up domestic demand was no easy task for any country and could take more than a decade, she said.

Experts said the Strategic and Economic Dialogue, which took place in Washington D.C. late July, displayed a newer, deeper US-China engagement, though few significant breakthroughs had been spotted by Western media at the forum, which is deemed by Richmond to be a more comprehensive mechanism for addressing Sino-US relations than those under the Bush administration,

The engagement displayed at the Washington forum symbolized both countries' willingness to beef up cooperation.

Richmond said that, while cross-Pacific trade was essential to both countries' economies, there were more issues to resolve such as a dispute over tire imports from China.

US labor organizations are lobbying for restrictions on tire imports from China, while Chinese manufacturers said tariffs would shut them out of the US market.

The US President is expected to announce his decision on the issue by September 17.

Protectionism aside, the United States and China are facing other, more long-term and structural challenges.

Philip Levy, resident scholar at the Washington, D.C.-based American Enterprise Institute and a former member of the state secretary's policy planning staff, said it was too early for the Obama administration to determine what shape US-China trade relations would take.

But so far there are few differences - in substance, at least - from the Bush administration, he added.

"In terms of substance, there is not a lot of difference between Obama's relationship with China and Bush's," he said.

One difference, however, is that Obama may strive to enforce World Trade Organization rules more than his predecessor did, the scholar said.

"How that will play out remains to be seen," Levy said.

Still there is much speculation that Obama is caught between two forces - free trade on one hand and pressure from home unions on the other, Levy added.

But Ambassador Huntsman expressed optimism over the bilateral trade relationship, saying his top priority in Beijing would be "helping lay the foundation for sustainable growth in the region and the global economy."

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