Minister of Foreign Trade and Economic Cooperation (MOFTEC) Shi Guangsheng said in an article published on April 2 that equality and mutual benefits should be the principle on Sino-US economic cooperation and trade.

Shi said that the trade and economic cooperation between China and the U.S. potential is huge. In the past 20 years, economic and trade relations have become a major part of Sino-US relations. China's General Customs Administration figures show that the bilateral trade volume reached 55 billion U.S. dollars in 1998, more than 22 times the figure for 1979 when China and the U.S. established full diplomatic relations. From 1979 to 1998, the total bilateral trade was worth 364.5 billion U.S dollars. U.S. figures show that the bilateral trade volume grew 35 times over the past 20 years. China's modernization drive has provided many opportunities for U.S. technology exports and its inexpensive labor-intensive products have helped meet U.S. market demand after the United States stopped or reduced its production of middle and lower level consumer goods, the minister said. The United States is China's second largest trade partner, and China is the fourth largest trade partner of the United States. Meanwhile, as China sped up its economic reforms US investments grew annually. By the end of 1998 26,600 U.S.-funded projects had been established worth 46.3 billion US dollars, with actual spending at 21.4 billion US dollars. The United States is China's number one foreign investor, certainly in terms of contractual agreements, and was the first to invest in the automobile, computer and life insurance sectors. American companies also have a significant market share in China's chemical products, telecommunications equipment and fast food outlets. Shi said that as the U.S. companies profited from these investments they also boosted China's economy.

In recent years, China and the United States have exchanged ideas on trade, investment, finance, customs, technological standards and certification, foreign economic arbitration and E-business, which has led to cooperation in other sectors.

However, the minister noted that despite such opportunities a certain amount of friction has crept into bilateral relations. "It is essential to take measures that enhance the benefits while avoiding the problems and friction in Sino-US economic cooperation." Shi stressed, adding that trade is of vital importance to the steady and healthy growth of bilateral cooperation."

The most-favored nation trade status issue has blocked trade and economic cooperation for a long time, he said. Although the United States is using the term normal trade relations, it has not changed its annual assessment procedures and bilateral trade remains unstable.

"We hope that related U.S. departments will take the reality and interests and wishes of the people of both countries into consideration and will cancel the annual assessments to settle the status issue once and for all and lay a foundation for the long-term, steady development of bilateral trade and economic cooperation," he said. China and the United States are conducting negotiations on China's entry into the World Trade Organization. Because the WTO is an international body with generally recognized principles, China's request to join the organization fully demonstrates its confidence and determination to undertake international obligations, he said. And China's entry would benefit China and other nations as well. "To doubt China's commitment to reforms and opening up to the outside world and leaving a major trading partner like China outside the WTO for a long time is totally abnormal," Shi emphasized. "As a major signatory nation of WTO, the United States should have common sense, be conscious of the righteousness of this, and honor its promise and play an active role in China's entry into the WTO."

Over the past few years, trade imbalance has become the focal point of Sino-U.S. trade relations. A trade surplus does exist for China in bilateral commodity trade, he said. However, there is a large gap between the statistics of the two sides. The original cause for this trade imbalance is rather complex, the minister said.

Transit trade accounts for a large proportion of Sino-U.S. trade, and a large amount of these commodities are moved via third parties, and goods from China gain 30 to 40 percent in added value at the third ports. Moreover, processed goods made up a large portion of China's exports to the United States, and U.S. businesses have established quite a few processing projects in the Chinese mainland, including the manufacturing of shoes and toys. An overwhelming majority of these goods are sold in the U.S., and the Chinese only receive comparatively low processing fees, Shi explained. Objectively speaking, most of the commodities China exports to the U.S. are consumer goods, many kinds of which are labor-intensive, low value-added goods no longer produced in the United States. The minister stressed that importing these products from China poses no competitive threat to the U.S. industry. At the same time, these China-imported consumer goods, usually cheap and of high quality, will help the U.S. control inflation and benefit U.S. consumers.

"So why not do the business that is win-win?" Shi asked.

The United States has greatest number of multinational corporations in the world. China, benefiting from its cheap labor, large market, and preferential policies for foreign investment, has become the world's second-largest target nation for direct overseas investment, said the minister. U.S. companies, in terms of both number and performance, are among the most successful investing in China, and a large proportion of U.S. multinationals have Chinese branches selling products, with many of their products occupying a large share of the market and reaping remarkable benefits.

However, these kinds of sales do not appear in the statistics as U.S. exports to China.

Apart from the objective causes mentioned above, the Sino-U.S. trade imbalance also resulted from subjective reasons on the U.S. side. "We regret to see that while complaining about its trade deficit with China, and instead of positively taking efficient initiatives to promote its exports, the U.S. side has made harsh, even discriminating restrictions against hi-tech exports to China, " he said. "This has left U.S. businesses out of opportunities to export to China." The recent flap over the so-called China theft of U.S. nuclear technology inside the United States fully demonstrates that the United States' China policy is influenced by Cold War thinking, he said.

As long as this policy continues, the Sino-U.S. trade imbalance will be hard to change, he said. Because of different economic structures and levels of development, the complementary pattern and present status of Sino-U.S. trade is likely to persist for a long time to come. However, bilateral trade, which has continued to grow, has brought great benefits to the economic development of both nations. So the two sides should face this reality and regard the trade imbalance objectively and comprehensively from a long-term point of view, and not politicize the problem, said Shi. China attaches great importance to the trade imbalance with the U.S., and has made huge efforts to solve this problem. China will continue to create a comfortable environment for imports from other nations, including the Unites States. We hope the U.S. will also relax its export restrictions, and return to governmental trade and investment promotion plans for projects such as the Trade Administration and Overseas Private Investment Corporation, and preferential loans from its Import-Export Bank. These measures will improve the compatibility of U.S. businesses in the Chinese market. The basic principle for the development and promotion of state-to-state economic and trade relations is to handle existing problems on the basis of mutual respect and equal negotiation, the minister noted. Experience shows that taking advantage of the trade issue in domestic politics, or taking unilateral measures, are of no help in solving problems, but instead have a negative impacts on the development of trade and even bilateral relations between China and the United States, he said. Only after non-trade factors are removed, and only after the two countries assume an active and practical attitude to resolve existing problems, can Sino-U.S. economic and trade relations embark on a mature, healthy and stable road. "China and the United States should be able to take a constructive and cooperative attitude toward bilateral economic and trade relations," Shi said. "They should not conceal problems when development is going smoothly, nor lose overall perspective when problems arise. In this way, the potential for development and cooperation in bilateral economic and trade relations will be brought into full play." China's sustained economic development and huge potential market provide enormous room for the development of bilateral cooperation. With the deepening of China's reform and opening-up drive, the country will open its market wider to other countries. According to China's long-term economic and social development plan, its economy will maintain a fairly high growth rate in the coming decade.

China plans to give priority to the development of basic industries such as agriculture, energy, transportation and telecommunications, and pillar industries such as automobiles, machinery, electronics, petrochemicals, and construction, as well as the service sector, he said.

The opening of these areas to overseas investors will provide huge investment and trade opportunities to companies from the United States as well as other countries. China is increasingly becoming a major market where foreign capital, services, and commodities compete with one another, the minister predicted.

It is estimated that China will import 1.5 trillion U.S. dollars worth of equipment, technology and products during the seven years from 1999 to 2005. And China welcomes U.S. companies to take an active part in competing in the Chinese market on a equal basis, he said.

"We believe that as long as both nations stick to the principle of equality, mutual benefit, mutual trust and concessions, taking the overall situation and common development into consideration, and make concerted efforts to forge a relationship geared to the 21st century to meet the wishes and needs of both peoples, Sino-U.S. economic and trade will certainly gain a new momentum, and will also contribute to the stability and development of the Asian-Pacific region and the world as a whole," he concluded.