Trade with China important to US economy, report

Trade with China important to US economy, report
© Getty Images

Trade with China is important to the health of the U.S. economy but the communist nation must continue implementing key reforms to improve market access, a new report says.

The U.S.-China Business Council (USCBC) and Oxford Economics released on report on Tuesday shedding more light on the strained yet mostly positive relationship between the world’s two largest economies.


“The overall impact of the commercial relationship with China on the U.S. economy remains positive,” said USCBC president John Frisbie. 

“Jobs have been lost in some areas, but jobs have been created and supported in other areas,” Frisbie said.

“Policymakers in the United States need to recognize that technology has had a far bigger impact on U.S. manufacturing employment than China, and take appropriate actions to support growth and impacted workers.”

Frisbie noted that U.S. business have lost confidence in China because of the slow pace of economic change that is needed to open more of the economy to American goods and services.

The USCBC report said that trade with China supports roughly 2.6 million U.S. jobs, across many industries, and created $216 billion in growth in 2015.

“China’s rise has had a significant and positive impact on the U.S.,” said Scott Livermore, managing director of macro and industry services for Oxford Economics, which produced the report.  

China purchased 7.3 percent of all U.S. exports — $165 billion in goods and services — from the United States in 2015.  The United States actually has a surplus with China of 0.2 percent of gross domestic product on trade in services, the report said. 

Donald TrumpDonald John TrumpIvanka Trump, Jared Kusher's lawyer threatens to sue Lincoln Project over Times Square billboards Facebook, Twitter CEOs to testify before Senate Judiciary Committee on Nov. 17 Sanders hits back at Trump's attack on 'socialized medicine' MORE waged a vigorous campaign against China in his run for the White House, focusing on the negatives faced by the United States such as job losses.

The president-elect so far has chosen Cabinet and other administration officials who hold anti-China views and have promised to punish Beijing for skirting international trade rules, including manipulating their currency, the yuan. 

Separately on Tuesday, Treasury Secretary Jacob Lew warned that the U.S. can’t ignore steps taken by China to buoy the value of its currency after years of devaluing aimed at giving Beijing a global trade advantage.

Lew told the Wall Street Journal that it would be “analytically dangerous” to compare China’s recent actions on the exchange rate with previous efforts to let the yuan drop in value .

And without help from China, the United States may struggled to contain North Korea’s efforts to deploy nuclear weapons.

Trump has promised to label China a currency manipulator as soon as this spring in what could be the first step in slapping tariffs on Chinese products.

Lew also said that China appreciates being treated with respect as the two nations engage in their economic relationship. 

“They respect candid and intellectually sound criticism. Where I think they bridle is when they feel that they’re being caricatured or where facts are being ignored,” Lew said.

A new report from the U.S. Trade Representative’s office on Monday said that while substantial growth in U.S. exports is a sign of progress the Chinese government continues to intervene in its economy, creating tensions between the two nations.

"Many of the problems that arise in the U.S.-China trade and investment relationship can be traced to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy, which continue to generate significant trade distortions that inevitably give rise to trade frictions," the USTR said in its annual report to Congress.

On Tuesday, U.S. Trade Representative Michael FromanMichael B.G. FromanOn The Money: Sanders unveils plan to wipe .6T in student debt | How Sanders plan plays in rivalry with Warren | Treasury watchdog to probe delay of Harriet Tubman bills | Trump says Fed 'blew it' on rate decision Democrats give Trump trade chief high marks US trade rep spent nearly M to furnish offices: report MORE, who made his final speech at the Washington International Trade Association, said he is supportive of the next administration taking a tough stance on China.

He highlighted that the Obama administration had filed 14 cases with the World Trade Organization against China and won them all.

Yet he conceded that he is perplexed about why Trump would follow through on his promise to ditch the Trans-Pacific Partnership.

“There simply is no way to reconcile a get-tough-on-China policy with withdrawing from TPP,” Froman said.  

“That would be the biggest gift any U.S. President could give China, one with broad and deep consequences, economic and strategic. It would be huge for China.”

Essentially he said that the move would signal an abdication of U.S. leadership in the Asia-Pacific.

“It would be a strategic miscalculation of enormous proportions,” he said.