China's development offers opportunities for world economy
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Tough talk about an undervalued yuan giving Chinese goods unfair trade advantages at the cost of American jobs shows signs of easing in the United States after President Barack Obama said last week that half a million U.S. jobs are created each year by exports to China.
This year, 3,000 college students in California will each receive 1,000 U.S. dollars from Alibaba Group, China's largest e-commerce company, to assist them in operating online shops and logistics services on Alibaba's subsidiary websites.
According to Alibaba executives, the new initiative will help to create up to 100,000 jobs in the United States in the next two to three years.
For more than a decade, China has been touted as an economic powerhouse, yet the country's export-led growth model proved unsustainable when outside demand slumped in the global economic crisis.
Meanwhile, China's 2.85 trillion U.S. dollars of foreign exchange reserves accumulated from decades of trade surpluses has contributed to worsening domestic inflation and risks contracting in value with a strengthening yuan.
Having been the world's largest exporter, China has also looked to become a major importer, investor and creator of employment.
Leap-frogging growth
According to the ruling party's proposal on formulating the country's 12th Five-Year Plan (2011-2015), the country shall attach equal importance to promoting exports and imports. Both inbound investment and outbound investment are encouraged.
During Chinese President Hu Jintao's state visit to America last week, China and the United States signed tens of billions U.S. dollars worth of trade agreements. AFP on Jan. 19 cited an unnamed official with the Obama administration saying the deals would generate 235,000 U.S. jobs.
The annual U.S. exports to China in goods and services supported more than half a million U.S. jobs, Obama said in talks with Hu.
Chinese Commerce Minister Chen Deming said the staggering sum of the contracts underscores the significance of the Sino-U.S. trade ties.
He said that during Hu's visit, the two sides also signed 5.1 billion U.S. dollars of investment deals, including Chinese investment of 3.24 billion U.S. dollars in the United States.
Under a memorandum of understanding signed during the visit, appliance maker Haier and Honeywell will jointly develop air conditioners, refrigerators and solar-powered water heater technologies based on Honeywell's energy-efficient refrigerants and blowing agents.
"This new round of U.S.-China commercial cooperation will open tremendous opportunities for companies like us to leverage our global resources and our established China operations to leapfrog with China's fast-growing economy," said Shane Tedjarati, president of Honeywell China and India.
Economic quagmire
In recent years, Chinese leaders have often taken large business delegations along on overseas visits to promote economic exchanges.
The latest examples included trade deals valued at more than 20 billion U.S. dollars with India and Pakistan signed during Premier Wen Jiaobao's visit to the two countries in December, and the 20.9 billion U.S. dollars in contracts with Spain, Germany and Britain during Vice Premier Li Keqiang's visit to those nations this month.
According to the World Trade Organization (WTO), in 2009 when global trade tumbled, U.S. imports dropped 16.5 percent and those of the European Union fell by 14.5 percent. China was the only major economy that saw a rise in imports, which amounted to 2.8 percent.
Last year, China became the largest export market for Japan, Australia, the Republic of Korea, Brazil and South Africa. It was also the third largest export destination for the United States, the European Union and India.
Hard hit by the global financial crisis, the U.S. economy remains thirsty for foreign investment to lift it out of its quagmire. Chinese entrepreneurs, used to accepting foreign investment, are learning to grow their money abroad.
Ahead of Hu's visit, Chinese business delegations attended an investment promotion event organized by U.S. city administrations.
Easing restrictions
However, political barriers hinder their global expansion.
Cheng Lixin, vice president of telecommunications equipment manufacturer ZET, last week said the company was unfairly treated in the U.S. market because of misunderstandings with U.S. politicians.
Major Chinese telecom equipment makers, like Huawei and ZET, were frequently questioned by U.S. investigators over concerns of potential threats to U.S. information security, undermining major deals with companies such as Verizon and AT&T.
"Wherever you are from, as long as you abide by the law, you should receive equal opportunities," Cheng said.
Barriers not only exist in the U.S. foreign investment policy, but also in export regulations. That restricts long-term bilateral trade, which the one-off purchases, though in hefty volume, do not assist.
"Whether China will buy more foreign products depends on what kind of products they offer. If they can ease the restrictions on exports of advanced technology, China surely will buy more," said Wang Jinbin, professor of economics at China's Renmin University.
The U.S. government bans exports of a wide range of products and technology to China ranging from nuclear facilities, laser devices to aerospace technology, for reasons of "safeguarding national security".
"The U.S. has been adopting a discriminatory trade policy against China for years. Military supplies are prohibited, and even those for civilian use are under severe scrutiny," Chen Deming said.
In December, the U.S. granted preferential trade rights to 164 countries, said Chen, but China, its third largest export base and with a huge market potential, was excluded.
Chen also pointed out in Washington that export restrictions are largely to blame for the trade imbalance between the two countries, saying the U.S. accounted for 99 percent of China's surplus last year.
He said both sides need to further open trade policies.
"Hopefully our sincerity and efforts will be well responded to. Chinese importers are looking to freely purchase anything that people need," Chen said.
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