U.S. Is the Biggest Beneficiary of China’s Economic Growth

Since President Obama entered the White House, the trade tension between China and the United States has obviously increased on topics such as the value of renminbi, piracy rights, government procurement, and rare earth export quotas. Although there are a lot of obstacles, if we look at the whole picture of the Sino-American trade relationship, tension is only a tributary, as cooperation between the two countries and economic growth remain the primary foci. In other words, the trade relationship between China and America is growing, with some tension, at a tremendous rate.

Last December, 32 U.S. senators addressed a joint letter to the leader of China, and requested that President Hu Jintao mention the benefits that would come to America through the Sino-American trade relationship during his visit to the U.S. in the middle of January. But it has already been proved that China and the U.S. are important business partners, and the trade relationship has been a win-win situation.

First of all, most goods exported by China to the U.S. are high-quality, low-cost consumer goods. This meets the needs of the U.S. market, as it relieves the pressure of inflation in America; hence, it fuels industrial reconstruction and economic growth. According to data collected by Morgan Stanley, from 1996 to 2003, China’s trade surplus accumulated a total of US$ 229.18 billion; from buying these high-quality, low-cost products, American consumers had saved over US$ 600 billion, which helped lower the cost of manufacturing and control inflation in the U.S.

Also, as the market in China has grown, its demand on America’s exports has skyrocketed. Back in 1980, China ranked only 24th among America’s trade partners, and in 2007, China passed Japan and became America’s third largest export market. According to data published by the U.S.-China Business Council last July, from 2000 to 2009, the U.S.-China export value increased from US$ 16.2 billion to US$ 69.6 billion, up by 330 percent. America’s total export value was only up by 29 percent, without including China. If the market of China did not expand, Obama’s plan of doubling exports in five years probably would not succeed.

Third, since the beginning of the new century, China has been buying America’s bonds and has become a big benefactor of America’s economic growth. In September 2008, China passed Japan and became the largest owner of America’s bonds. Especially after the financial crisis, the Chinese government rapidly bought off America’s bonds and helped the U.S. to get ready for the following economic crisis. In October 2010, China owned US$ 906.8 billion worth of America’s bonds, which increased by US$ 388.1 billion in less than three years.

Such large-scale financial aid from one country to another has happened only twice in human history. The first time was the Lend-Lease program during WWII, and the second was the Marshall Plan after the war. The total amount involved in the two programs was over US$ 60.0 billion, and it was the biggest contribution from the U.S. to the war against fascism and the world economy. The US$ 906.8 billion spent by China on America’s bonds had already far exceeded the US$ 787 billion spent in Obama’s stimulus plan; it has been a big help to America during the financial crisis and is helping tremendously in the recovery of the U.S. economy. This action by China should not be ignored or forgotten.

Last, but not least, during China’s unprecedentedly large-scale urbanization, its need to import high technologies and facilities is skyrocketing. Currently, China is seeking clean energy, energy-efficient products, renewable energy, and eco-friendly technology. A good example would be that, in 2006, during the fourth and fifth meetings of the China-U.S. Strategic Economic Dialogue, the two countries made an agreement to work together for 10 years on energy and environmental issues, with the potential of bringing billions of dollars to American corporations. On December 16, 2006, China and the U.S. signed a contract to integrate American Westhouse Electric’s AP1000 technology into the construction of four nuclear reactors in locations such as Sanmen in Zhejiang province and Yangjiang in Canton province, which cost US $ 8 billion in total. United States Energy Secretary Samuel Bodman said, “This represents a multi-billion dollar commitment by the Chinese that should create some 5,500 jobs in the United States.” This demonstrates that cooperation in public technology between China and the U.S. not only yields benefits to both nations, but it also improves energy saving around the globe; it is much better than a win-win situation.

In 2009, China became the second largest importing country in the world, and according to the “12th five-year plan,” the total of imported goods is projected to reach around US $8 trillion. It is a huge new market. If the U.S. government loosens its regulation on sharing new public technology with China, large and medium-sized American corporations will have the ability to take a bigger share of this new market. China will also become the first or second largest market of America’s exports. China and America are at different stages of civilization: One is industrial and one is modern; collaboration in trading between the two countries will guarantee great prosperity to both sides. The modernization of China will promote America’s economic growth. In the 31 years of China’s revolution and modernization, the greatest beneficiaries in China are its 130 billion citizens; the U.S. is the greatest overseas beneficiary.