ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Friday, February 21, 1997 TAG: 9702210063
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
AS CHINA'S ECONOMY THRIVES because of reforms ordered by a revered communist, the United States pays a price.
Deng Xiaoping, the ardent communist, unleashed free-market forces that will soon push China past the United States as the world's largest economy.
That transformation - Deng's biggest legacy - is already felt in a multitude of ways by American consumers and factory workers.
Sixty percent of the shoes and more than half the toys sold in America are made in China.
And it's not just shoes and toys. It's shirts, dresses, jeans and sweaters. It's household appliances, telephones, answering machines, computers and office fax machines.
In all, America imported $51.5 billion worth of products from China last year - a 13 percent increase from 1995 and up from near zero 20 years ago, before Deng started China trading with the West.
Now America is China's biggest foreign market. The economic revolution Deng set in motion in 1978 has showered Americans with pocketbook benefits in the form of cheaper consumer goods - and has provided Chinese workers with a rising standard of living.
``Deng pulled off the biggest economic transformation of this century. He turned China from a basket case to a world economic power,'' said Greg Mastel, trade specialist at the Economic Strategy Institute.
Mastel is author of an upcoming book that predicts China's economy, by one measurement, will overtake the United States to become the world's largest by 2009.
Deng's economic legacy has also meant a soaring U.S. trade deficit that has cost thousands of American factory jobs, lost to lower-wage Chinese workers. The Chinese have followed the Japanese model, pushing growth through exports while protecting their domestic industries.
American corporations eager to crack a market of 1.2 billion people have repeatedly been thwarted.
President Clinton has argued that America needs to ``compete, not retreat'' in the new global economy, and his administration has sought to keep U.S. consumers happy by lowering domestic trade barriers while pursuing trade deals to tear down barriers to American exports.
So far, that effort has failed miserably with regard to China.
For 1996, America managed to export just $11.9 billion in manufactured goods and farm products to China, a tiny 1.9 percent increase compared with the 13 percent surge in Chinese products coming into America.
That pushed the U.S.-China trade deficit to $39.5 billion last year, the biggest America has ever suffered with any country other than Japan.
Using a Commerce Department benchmark, the deficit would translate into more than a half million lost jobs - workers whose plants closed because they could not compete with China's lower wages.
America's trade deficit with China has risen every year for the past decade and is expected to surpass the deficit with Japan, probably this year.
The Clinton administration has stepped up pressure on China to lower its numerous trade barriers and buy more American goods.
Until it does, U.S. officials have promised to continue blocking China's membership in the World Trade Organization.
Recently, Chinese officials agreed for the first time to make major changes in their protectionist policies. They promised to stop insisting that foreign companies manufacturing in China ship most of their products out of the country.
Some experts see this new offer as a sign China may be ready to take the next step toward capitalism.
``If China does liberalize, given the size of their market, we could be exporting a lot more,'' said Gary Hufbauer, economist at the Institute of International Economics, another Washington research organization. ``Our $12 billion in exports could easily be doubled or tripled.''
If that happens, then Coca-Cola, which is already selling 100 million cases of soft drinks in the country, and Boeing, with its multimillion-dollar orders for jetliners, could be joined by many other U.S. corporations scrambling to serve the world's largest market.
LENGTH: Medium: 79 linesby CNB