Ranked behind countries such as Malaysia, Australia and South Africa, China was the 15th largest export market to the United States and only the 26th largest supplier of imports to the United States. Today, it ranks as the fourth largest goods export market, trailing behind countries like Japan, Canada and Mexico.

With a then-total bilateral trade relationship of $5.7 billion in 1981, and with more than half of U.S. exports as agricultural products and virtually no foreign direct investment, it is hard to imagine that these days trade with China has increased 50 times over and will reach some $286 billion in 2005.

It is also widely expected that U.S. exports to China will reach roughly $42 billion with less than one-eighth of exports resting on agriculture products a far cry from 1981 figures. According to the U.S. trade office, the majority of exports sent by the United States to China fell in categories of machinery, aircraft, optical and medical equipment. Chinese exports to the United States, in turn, are expected to reach $245 billion compared to the $2.1 billion some 20 years ago -- generating the largest trade imbalance in history of about $200 billion.

The choice to liberalize its economy and encourage investment has been part of the reason for China's growing prosperity. Today, over 90 percent of Chinese exports are backed by foreign investments. Beijing's economic growth rate has also exceeded 9 percent over the last decade.

Since its accession to the World Trade Organization in December 2001, China's economy has risen five times faster than the rest of world due to its allowance of scheduled tariff reductions, market access expansion and elimination of non-tariff barriers. Overall, Beijing has lowered its tariffs to seven percent from an average 25 percent.

However, Beijing's emergence as an economic powerhouse has caused some irritation in Washington from both congressional leaders on Capitol Hill to the Bush administration due to a rising trade imbalance, currency exchange controls and concerns over piracy and intellectual property rights.

"China's apprentice period must now come to a close, and China must act as a fully accountable participant and beneficiary in the international trading system," Karan Bhatia, Deputy U.S. Trade Representative, told members of the U.S.-China Business Council on Wednesday. "China must find a way to pursue its own self-interest while also adhering to, and helping to shape, the policies and institutions that under gird its own prosperity and the prosperity of its trading partners."

The Bush administration has had to walk a fine line with China between supporting increased trade facilitation and being overtly critical of some of its commitments as a member of the World Trade Organization, an endeavor it describes as a sign of a "mature" relationship.

Washington has view China's track record in maintaining its WTO commitments as "mixed" calling on Beijing to make great market openings to U.S. export products.

While the administration has recognized that China's booming trade, economic growth and technological advancement has benefited the U.S. economy by offering "low-cost consumer and industrial goods," it has repeatedly made the case that Beijing must be held accountable by the same international trading rules as other partners, including managing the trade imbalance, discontinuing the use of generous subsidies and ending long-time barriers to American products.

"China has not played a role in strengthening the international trading system commensurate with its commercial heft and the benefit it has obtained from that system," said Bhatia. "An imbalance of this magnitude is not sustainable, either politically or economically, over the long term. One need only ask whether - if the tables were turned - China would tolerate a bilateral trade imbalance of that size with the United States."

The growing frustration among congressional members has prompted some in Congress to take steps to install U.S. containment policies and legislative threats to raise export tariffs in order to manage irritant issues like currency exchange controls.

Both Sen. Charles Schumer, D-N.Y. and Sen. Lindsey Graham, R-S.C. have threatened legislation that would impose tariffs of 27.5 percent on Chinese exports unless Beijing agrees to dramatically raise the value of its currency. Schumer suggested last month he may bring the legislation forward for a vote in 2006.

Some members of Congress have sought to address rampant concerns of a trade imbalance by arguing for increased U.S. competitiveness in the global trading system.

"We must stop viewing Chinese and Indian economic successes as a "zero-sum" game," said Sen. Max Baucus, D-Mont., in prepared remarks at the National Press Club on Wednesday. "Their economic gains do not depend on our losses. We can all prosper. We can all grow. Opportunities for America abound in a successful China and India. But we are not there taking advantage of them."

Baucus outlined seven legislative bills he intends to introduce into Congress this year to bulk up U.S. competitiveness in order to assuage the impact of emerging economies like India and China on the global economy.

Related Links