Trade surplus or false alarm

US refuses to admit the benefits of bilateral trade and is ignorant of the damage its financial crisis has caused to China's economy.

The Wall Street Journal published an article on Sino-US trade last year, arguing that the flow of goods from China has deeply undermined the United States. The article quoted three American researchers as having said that the economic compromises the US has had to make because of competition from China are far beyond people's imagination.

This indeed is a fallacy.

Sino-US trade has flourished since the establishment of diplomatic ties between China and the US in early 1979. Statistics from the US show that the bilateral trade volume increased from a meager $2.37 billion in 1979 to $456.8 billion in 2010, a 193-fold increase. Also, Sino-US trade accounted for 14.3 percent of the US' total foreign trade volume in 2010. If bilateral trade had not been conducted on a mutually beneficial basis, such a considerable trade growth would not have been possible.

In fact, deepening mutual benefit, reciprocity and interdependence have made China and the US strategic trading partners now.

Given their different development stages, China and the US complement each other in many ways in their industrial structure. The complementary and mutually beneficial trade between China and the US is a typical example of the largest-scale and most-extensive division of labor and cooperation in the international community.

In the early 1980s, the US underwent its third industrial structural adjustment, which caused an exodus of a large number of labor-intensive industries overseas. This trend concurred with China's reform and opening-up policy and its efforts to absorb foreign funds and develop processing trade, thus facilitating cooperation between the two countries. Take shoemaking for example. In 1976, US shoemakers made about 53 percent of the leather shoes available in the American market. But now, China exports 80 percent of the leather shoes sold in the US.

Most of the goods China exports to the US are quality but inexpensive products of daily use that cater to American market demands. These Chinese exports have helped ease inflation in the US and served as a necessary supplement to the US' industrial structural adjustment and economic development.

According to a Morgan Stanley estimate, China had a $229.2-billion surplus in its trade with the US from 1996 to 2003, but the export of huge amounts of quality but inexpensive Chinese goods to the US helped American consumers save as much as $600 billion. Such exports have also helped American manufacturers to reduce their production costs and the US government to curb inflation.

International trade is based on mutually complementary advantages. Chinese workers' per hour wages on average is $1.5, whereas their counterparts in the US make $18 to $20 an hour. If American workers were to make labor-intensive products such as leather shoes today, many US consumers would not be able to afford them.

The strength of the US lies in high technology. To give just one example, China has bought more than 600 large Boeing jets since 1980. If just one Boeing 747 costs more than $100 million, one can imagine how many high-paying jobs China has helped maintain and/or create in the US. In return, China can only sell about 50 million pairs of leather shoes to fill the trade gap.