Trade relations are a “win-win”

Chance to present China's positive side comes at uneasy time

By Jeremiah McWilliams
ST. LOUIS POST-DISPATCH
02/21/2008

China's ambassador to the United States came to the St. Louis area this week to meet with top executives, plug the economic ties between the U.S. and China and — schedule permitting — visit the Gateway Arch.

For Zhou Wenzhong, the fact-finding and trade mission was also a chance to present China's positive side at an uneasy time. For local organizers, it was a chance to tout the region's benefits and openness to more trade with China.

"Both our countries have benefitted from such a close relationship," Zhou said in a luncheon speech Wednesday at the Donald Danforth Plant Science Center in Creve Coeur.

"We should not let anything happen that hurts our win-win trade relations."

Illinois shipped goods worth $1.96 billion to China last year — an increase of 29 percent in one year, according to the World Trade Center St. Louis, one of the luncheon's organizers along with the St. Louis Regional Chamber & Growth Association. Missouri exported just over $1 billion to China, up 32 percent from 2006, according to the group.

But lead-tainted toys, poisonous pet food and a wave of recalls have swung a spotlight of scrutiny on the goods China sends to the U.S. Also sore points in some quarters: China's lax intellectual property protections and currency policies that make its manufacturers more competitive versus U.S. firms.

The U.S. and China "have differences — that is a fact," said U.S. Sen. Claire McCaskill, D-Mo., introducing Zhou to a crowd of about 130. "We have issues and things we disagree on."

"There are ways to solve a problem and there are ways to make it worse" — and open communication is the former, said McCaskill, who along with U.S. Sen. Christopher "Kit" Bond, R-Mo., invited Zhou to St. Louis.

"Free trade benefits both parties," Bond said during the luncheon. "It's not a zero-sum game."

The two nations' economies are intertwined as never before. The U.S. exported $65.2 billion in goods such as soybeans, civilian aircraft and industrial machines to China last year. China, meanwhile, sent $321.5 billion worth of computers, toys, games, sporting goods and apparel to the U.S.

The result was a 10 percent increase in the trade deficit with China — to a record $256.3 billion.

Although the U.S. runs trade deficits with a number of nations, "the relationship (with China) is obviously complicated and goes much beyond the economic side," said James Little, a professor at Washington University's Olin Business School. "There is a fairly significant anti-trade sentiment out there, and the focus of much of that is China. ... China understands that and would like to deflect it as much as possible."

Despite — or perhaps because of — China's role as a source of affordable goods that support American consumer spending, the relationship is producing lots of angst.

The upcoming Beijing Olympics have thrown the Chinese government's record into sharper relief. Human rights activists are pressuring Olympic advertisers, including St. Louis-based Anheuser-Busch Cos., to shame the Chinese government for its support for the government of Sudan. Washington blames the Khartoum regime for fomenting violence in the Darfur region that has killed 200,000 and displaced 2 million people.

In his speech, Zhou said China is on the path to "peaceful development," raising its citizens' incomes and spending power. That, he said, creates more of an opportunity for American companies sending goods to China. He was unavailable for questions after the speech.

Zhou's visit was "an exceptional opportunity" to forge stronger ties, said Richard Fleming, president and chief executive of the RCGA. "The planets have aligned in a number of ways."

jmcwilliams@post-dispatch.com | 314-340-8372