The Chinese Ministry of Commerce has reported a trade surplus of US$100 billion with the United States. But the US has insisted that the figure in 2005 was nearly US$200 billion, doubled China's version.

Why? An article by Zhao Xingshu, a researcher from the American Studies Institute of Chinese Academy of Social Sciences carried on Monday's People's Daily explains the reasons for the imbalance.

The article says that the imbalance results from the world wide labor division and structural adjustment in the era of economic globalization and is a natural consequence of the US economic policy, its strict export control to China in particular.

The article further elaborates that China's exports to the US are largely labor-intensive products, including low-tech content information products, toys, shoes and apparel. Production of those commodities in the US has reduced or almost disappeared. The US would have to import them from other countries even if it did not buy from China. The growth of the US trade deficit with China is actually a shift of its trade deficit with Japan, South Korea and southeast Asian countries.

In terms of exports, a large part of the US commodity exports to China in the past has been replaced by local production and sales by American enterprises in China. But such trading is not reflected in the US trade figures. More importantly, the US has long imposed increasing restrictions on its exports to China, making it less possible for the US business to expand exports with comparative advantages.

The US has imposed export ban to China on more types in a larger scale, especially civil technologies which can be used for military purposes since the Sept. 11 terrorist attacks in 2001. The ban mainly involve two categories of products. One is controlled by the US Department of Commerce. The products are those for both civil and military use, including technologies for producing plane spare parts, computer chips and machine tools. The other, in military supplies, is controlled by the US State Department, including products, technologies and services for defense.

However, science and technological revolutions have made it increasingly difficult to define in many cases whether the purpose of a product or technology is for civil use or for military use. That has sparked power disputes between the US State Department and Department of Commerce. In addition, the complicated red tapes in the application process cost American exporters time and competitiveness. They then lost their markets and profits to European and Japanese competitors. This has added more deficit to the US trade with China.

While the US continues its restrictions on exports to China, other developed nations show willingness to offer inter-governmental financial support to China for imports, improving their competitiveness on the Chinese market. Take China and EU as an example, bilateral trade in recent years has been on such a fast track that the EU has become China's largest trading partner and China is EU's second.

In 2004, China signed US $5.5 billion worth of hi-tech import contracts with the EU, soaring 63 percent. The Sino-EU trade stood at US$177.28 billion then and was expected to reach US$200 billion in 2005. That is in sharp contrast with US$2.9 billion of hi-tech import contracts with the US in the same year, down by nearly 11 percent from the previous year. The US refused to export nuclear and satellite technologies to China then, losing at least US$25 billion worth of orders from China.

The US restrictions on exports to China has reduced the opportunities of cooperation between Chinese clients and US exporters and hindered the further development of the Sino-US economic and trade ties.

In fact, China needs a lot of advanced technologies and equipment to power its modernization drive. The US has advantages in technology. If the US government relaxes or even abandons the discriminative export policy toward China for the sake of long-term interest of promoting bilateral trade and economic ties, the US trade deficit with China will be narrowed effectively.

By People's Daily Online