The U.S. trade deficit with China is about to be back in the news – big time.
The deficit, which increased by $100 million to $25.6 billion in November, the last month for which estimates are available, is expected to be one of the issues President Obama discusses with Chinese President Hu Jintao in Washington next week.
While the trade deficit has been growing, U.S. sales of soybeans and corn to China have also been on the upswing. Chicago Board of Trade soybean futures closed above $14 per bushel today and corn around $6.50 a bushel.
The purchases of U.S. agricultural products – cotton sales are also strengthening because of short supplies and growing demand for textiles in the U.S. – has been cited by Chinese trade officials in the past as efforts of its good faith efforts to be a responsible trading partner. “We buy your raw commodities and sell the processed products back to you,” it might be said.
But representatives of U.S. manufacturing aren’t buying it.
“Our trade deficit means lost jobs, closed factories, and a downward pressure on economic growth,” said Scott Paul, executive director of the Alliance for American Manufacturing, in a statement issued today. “President Obama has a unique opportunity to help change this course.”
Members of Congress are also calling on the president to take a strong stand and convey to President Hu that “China’s consistent violations of international trade law will no longer be tolerated,” as one member said this week.
Reps. Mike Michaud, D-Maine, and Thaddeus McCotter, R-Mich., said they are circulating a letter among their colleagues urging President Obama (R-MI) to express the U.S. government’s impatience with China’s reluctance to change its trade policies.
“In your upcoming meetings with Chinese President Hu Jintao, we know that you will express concerns about China’s persistent violation of international trade law,” the letter says. “It is vital, however, to impress upon President Hu that America’s patience is near an end and that we can no longer afford to tolerate China’s disregard for the binding commitments they agreed to as part of their accession to the World Trade Organization in 2001.”
These standards are in place to ensure that countries do not illegally advantage their economies at the expense of others, and China’s unwillingness to play by the rules is unfairly shuttering U.S. businesses and putting Americans out of work, the letter notes.
Michaud, McCotter and other congressmen have frequently pointed out the numerous economic policies in China that violate their WTO commitments and harm U.S. businesses and employment.
“Its currency is manipulated by as much as 40 percent, and its low value helps China to maintain its status as the world’s biggest exporter. Its paper sector benefits from illegal subsidies that have allowed the industry – which lacks natural forest reserves and a competitive advantage – to become the world’s largest paper producer. China’s green energy companies also enjoy illicit subsidies, as well as interest-free, government loans, at the direct expense of U.S. competitors.”
Paul said the president needs to lay out the consequences for Beijing “if it continues its mercantilist ways.”
“China accounts for more than 80 percent of the goods trade deficit, excluding petroleum. Lowering our trade deficit with China by putting an end to its currency manipulation, WTO-illegal industrial subsidies, and indigenous innovation requirements will boost the U.S. economy.”