New Mexico’s Exports to China Small but Growing
By Bob Quick, The Santa Fe New Mexican
Feb. 26–China’s total trade deficit with the U.S. was more than $200 billion in 2005 — the highest deficit with any single country.
That huge gap between what the U.S exports to China compared with imports has angered many in Congress and may eventually lead to trade barriers with China. Their nature and extent are hard to predict.
On the state level, the New Mexico Economic Development Department said New Mexico’s exports to China through October of 2005 came to $321 million. That compares with $221 million in all of 2004.
Another statistic — this one from the U.S. Treasury Department — shows New Mexico exported $2.3 billion in goods to 126 foreign markets in 2003.
The state Economic Development department indicates that about 15 small New Mexico businesses are involved in exports to China and names another 18 that import from China.
The department also indicated that Intel is by far the largest New Mexico exporter to China. In both 2004 and 2005, the top three exports from New Mexico to China were electrical machinery, dominated by digital monolithic integrated chips, mostly from Intel; ceramic products; and machinery, mainly spark-ignition parts and gas filters and purifiers.
The digital chips represent 94 percent of all New Mexico exports to China as of October 2005. No other product equaled even 4 percent of exports to China.
China may not be dependent on chips imported from Intel’s Rio Rancho plant forever — Intel has its China manufacturing facility in a free-trade zone near Shanghai. The plant makes and tests flash memory as well as chipsets, which are important in the manufacture of PC motherboards.
In an article in www.china.org., it was predicted demand for chips in China will grow to $118 billion by 2010.
Intel China Software Laboratory in downtown Shanghai is a part of Intel’s worldwide research and design labs. The lab has more than 100 engineers focused on building expertise in a variety of areas.
On the national level, imports aren’t likely to slow any time soon, although there is talk in Congress of imposing a steep tariff on Chinese goods.
Even with trade barriers, more Chinese clothes, shoes, toys, electronic goods, appliances, air conditioners and microwaves, to name some of the products China produces for export, are expected to be sold to the U.S. in coming years.
An ominous development for the U.S. auto industry is that the Chery Corp. wants to start shipping cars made in China to the U.S. in 2007.
Increased trade with China started in 2000 when President Bill Clinton ended years of debate and signed a bill extending permanent, normal trade status to China.
“Trade with China will not only extend our nation’s unprecedented economic growth, it offers us a chance to shape the future of the world’s most prosperous nation and to reaffirm our own global leadership for peace and prosperity,” Clinton said.
Now the trade imbalance has led some critics to charge that the commercial playing field is tilted toward China and has resulted in the loss of millions of American manufacturing jobs.
One China trade opponent has argued that the U.S. needs to raise trade barriers because China ” has too much production power and too little consumption” to allow the situation to continue as it is.
The textile industry is among the most concerned about Chinese imports, and textile manufacturers have asked for quotas to slow Chinese imports, contending they have damaged the domestic industry.
Textile importers — including Wal-Mart and Giorgio Armani — have sued to block the proposed limit on imports.
Whether or not the low prices consumers enjoy in shopping at Wal-Mart and other stores that carry Chinese-made goods outweighs the millions of American jobs lost — jobs that used to supply the giant retailer — remains an open question.
Larry Mishel, president of the Economic Policy Institute, told Frontline, “Theoretically the gains from trade offset the losses from trade. Nothing says that for the bottom threefourths of Americans that they are net gainers. In fact, I believe that most people have been losers from trade.”
Last week, the Bush administration promised to begin a crackdown on China. This includes the creation of a new China enforcement task force in the office of U.S. Trade Representative Rob Portman. Portman threatened to file unfair-trade cases against China if there is no progress in certain areas, including high Chinese tariffs on U.S. auto parts and Chinese copyright piracy.
In addition, Treasury Secretary John Snow said he is considering designating China as a currency manipulator in a report due to Congress in April. Critics say China continues to depress the value of its currency, the yuan, against the U.S. dollar. A 2 percent change was announced last year, but the yuan still remains around 8 to the dollar.
Chinese trade officials will visit Washington starting April 11, while Chinese President Hu Jintao will make his first official visit to the U.S. on April 24.
Information from the Associated Press was used in this report.
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