The International Herald Tribune | By Chris Buckley | October 29, 2003
China's relatively unfettered access to American markets may be jeopardized if it fails to move more swiftly to open its markets to American goods and services, the U.S. Secretary of Commerce, Donald Evans, warned on Tuesday.
Speaking in Beijing during a six-day visit to China, Evans used unusually pointed language to chide China for failing to live up to its World Trade Organization commitments to open its markets, and he warned that China's exports may be threatened by hardening protectionist sentiment in the United States.
"China is moving far too slowly in its transition to an open, market-based economy," Evans told an audience of American business executives in Beijing. "Time is running out. We need to see results." Evans is the latest Bush administration official to urge China to give the United States greater access to its markets and ease the growing trade imbalance between the two countries. But his comments were markedly blunter and more expansive than previous administration remarks. They came at a time when China's trade policies are the target of intensifying criticism in the United States, with manufacturing groups and members of Congress accusing China of unfairly holding down the value of its currency and dumping goods on American markets.
"We have been patient, but our patience is wearing thin," Evans said on Tuesday. "The American market will not remain open to Chinese exports indefinitely, if the Chinese market is not equally opened to U.S. companies and American workers."
China's failure to enforce copyright protection for films, software and domestic goods was a focus of Evans' remarks. During his morning speech and in an afternoon meeting with Prime Minister Wen Jiabao, he brandished a bootleg copy of "Intolerable Cruelty," a Hollywood film that recently opened in movie theaters in the United States but is already available in Beijing in bootleg digital copies selling for $1 apiece.
Evans said the Chinese government must use criminal punishments, not just fines, to crack down on pirate manufacturers. "Enforcement so far is not working," he said.
He also called for American companies to be given expanded powers to establish sales and distribution networks in China, and also for foreign businesses to be given transparent and equal treatment under business regulations. And he echoed previous calls by President George W. Bush and John Snow, the Treasury Secretary, for China to revalue its currency, the yuan, to make Chinese imports more expensive in the United States, and American imports to China cheaper.
Evans's complaints about China's observance of copyright rules and market openness are shared by many American businesses in China. In a recent report on American business in China, the American Chamber of Commerce for mainland China said the Chinese government's commitment to enforcing many WTO rules had flagged.
"In an unacceptably high number of instances, the government has failed to take the specific, timely and concrete steps needed to open markets to competition," the report said.
But coming changes in China's tax rules may take a bit of the momentum away from its export juggernaut.
The changes, which take effect Jan. 1, cut the rebates on tax payments that businesses can claim for goods sold abroad. They may raise the price of many Chinese-made consumer goods, including clothes, toys and electrical appliances.
The export rebate program is a victim of China's trade success. In recent years, the government has found itself short of cash to pay for a growing mountain of rebate claims.
The cuts are not likely to halt China's prodigious trade growth, but many economists foresee a palpable slowing of that growth, especially among low-end manufactured goods. Export businesses in fiercely competitive industries said that the cuts might erase already thin profit margins and imperil smaller manufacturers that were short of cash.
This, it seems, is the price China's government is willing to pay to defuse financial and international political strains unleashed by the country's trade boom.
"The export rebate cuts in effect amount to a revaluation of the yuan," said Zhang Shuguang, director of the Unirule Institute, a private economics research center in Beijing. "It will raise the price of exports without a formal revaluation. By how much is a difficult question, but there's sure to be ramifications."The International Herald Tribune:
