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NFTC President Provides Outlook on Future of U.S.-China Economic Relations
Date: 7/11/2007
Written By: Eric Thomas or Jennifer Cummings, The Fratelli Group for NFTC, 202-822-9491

Reinsch Predicts Little Change in Nature of Bilateral Relationship Over Next Few Years,

Says Product Safety Issue May be an Exception

Washington, DC ­ In a speech themed "Promises and Perils: The U.S.-PRC Trade Relationship" delivered today at the Center for National Policy, National Foreign Trade Council (NFTC) President Bill Reinsch outlined the current status and future of bilateral relations between the People's Republic of China (PRC) and the United States in the context of globalization.

 

 

"China is growing – fast. It is doing what Japan did in the 1950s and 1960s, what Korea and Taiwan did subsequently, and what Malaysia, the Philippines, Indonesia, Thailand and a host of others are trying to do right now," said Reinsch. "But China is different because of its size and its politics. With 1.3 billion people, there are few limits on its capacity. It will become a true economic rival – not the proverbial 800-pound gorilla but the 800,000-pound gorilla."

 

 


Using China as an example, Reinsch discussed the political consequences of globalization "as a force for both stability and instability, as it simultaneously pushes countries to conform to market principles and to Western norms of rule of law yet at the same time rides roughshod over deeply ingrained cultural values, exacerbates growing problems of income inequality, exploitation of workers, women, and children, and contributes to environmental degradation and resource depletion." By accelerating the pace of change, globalization creates massive insecurities about the future, which are evident both here and in China.

According to Reinsch, the Congressional response has thus far been similar to its response regarding
Japan in the 1980s – strong rhetoric with little actual action.

 

 


Reinsch discussed the various Congressional proposals regarding trade with China but concluded by questioning their efficacy, since the problems that need to be addressed are primarily U.S. problems rather than Chinese problems. Reinsch detailed the provisions of pending legislation that aims to correct currency misalignment, including:

 

 

  • S.1607 – Currency Exchange Rate Oversight Reform Act of 2007;
  • H.R. 2942 – Currency Reform for Fair Trade Act of 2007;
  • H.R. 1229 – Nonmarket Economy Trade Remedy Act of 2007; and
  • S. 1677 – Currency Reform and Financial Markets Access Act of 2007.

 

 

"From the standpoint of the bilateral relationship, while the Chinese will no doubt complain vociferously about whatever we do, these bills won't make much difference in the problems they intend to address, which unfortunately means that real solutions will be postponed even longer," Reinsch stated.

 

 

However, he noted, "Ironically, if you want to focus on what might change the trade relationship most rapidly, it will be if they fail to do a better job on product safety. Far more than Congressional legislation, if the American consumer turns against Chinese products because it believes them to be unsafe or unhealthy, and begins seeking out other products in the marketplace, it could be devastating to many Chinese manufacturers."

 

 


"The one thing we know for sure is that the rest of the world, particularly China and India, will continue to run faster, so it falls to us to pick up the pace if we want to retain our global position," Reinsch concluded.

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Advancing Global Commerce for Over 90 Years

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.