Representative Ashman


Trade with China
General Information
Ø History
Beginning in 1989 up until 1997, trade deficit was about 5.5 billion dollars (a year). From 1997 and 2001, the deficit increased to 8.6 billion dollars. From 2001 to 2003, this number increased to 25 billion dollars.
While trade with China gave the US about 200,000 jobs, the overwhelming amount of goods imported from China took the place 1.5 million more jobs.
Since they joined the World Trade Organization in 2001, the US has become China’s largest area of consumers (Scott).
China joined the World Trade Organization on December 11, 2001. Because of their membership, they had to reduce or eliminate many tariffs on imported goods. However, some still think they have more work to do in terms of reforming the way they trade (Morrison).
According to the 2007 census, we imported 295,817.5 million dollars from China and exported 58,340.1 million dollars. This means that by sanctioning them we would be hurting them more than ourselves, because they are reliant on us as customers. These numbers were way higher than any year previous. In 1985, exports nearly equaled imports (“Trade”).
Also in 2007, Treasury Secretary, Henry Paulson, said that restrictions on trade with China could increase tensions, limit economic growth, and even lose a market for US exports.
An important note about the yuan—it is in the United States’ interest, to make sure that the yuan does not become more valuable than the dollar. This would mean China would be able to have more expensive exports, therefore generating money (Weisman).
In 2005, it was believed that more than 3,000 companies employed spies for China. An FBI agent said, “China is trying to develop a military that can compete with the U.S., and they are willing to steal to get [it].” For instance, cases in the Silicon Valley have jumped up from 20% to 30% (Bennett).
China’s illegal policies, definitely has an impact on the United States. China has cost the US 1.5 million jobs from 1989 to 2003. Chinese government was not adequately controlling trade with the US, allowing people to illegally counterfeit goods (“Senators”).
Recent History and National Attention
In February, one Chinese man was given top secret documents about the US’s weapon trade with Taiwan. In addition, a Chinese worker for Boeing was indicted for stealing secrets (Lewis).
In September of 2007, over half a million Chinese made toys were recalled due to evidence they contained lead. 80% of toys in America are made in China. However, people are questioning whether they should trust goods made in China, because of the lax regulation by the government. This event definitely brought trade with China to national attention because this has to do with children (Mouawad).
Government Action
According to the Democratic Party website, Bush’s administration has not really done anything about trade with China, although various articles of legislation are sitting in committee (“Bush’s”).
In 2004, the Bush administration brought a case to the WTO about China’s policy of high taxes on imported goods, such as semiconductors. This issue was eventually settled (Morrison).
The government has challenged China in other ways, which are not as direct as imposing higher tariffs. For instance, in December of 2007, agreements were signed with China, making sure the goods and food imported from China will be safe. However, the actual funding for improved supervision would come from the 2009 administration. There are still some loose ends that are still being debated, though. I imagine this agreement was made possible because it is not that controversial, who can say they don’t want higher standards on goods (Raine)?
Court Cases
There have not being any court cases specifically about trade with China. However, individuals have been prosecuted. For instance, Chinese citizens suspected of stealing secrets have been tried in court. According to the Assistant Attorney General for National Security, there have been 6 cases as of February 2008 on Chinese people who have made espionage attempts (Lewis).
Ø Proposed Legislation
Title: To authorize appropriate action if the negotiations with the People's Republic of China regarding China's undervalued currency and currency manipulation are not successful.
Sponsor: Rep. John Spratt (D-SC)
Purpose: This bill would increase taxes and tariffs on Chinese imports, unless China agreed to stop illegally trying to make its currency stronger than the dollar. Right now this bill is still going through the legislative process and is in the House Subcommittee on Trade
Title: Fair Currency Act of 2007
Sponsor: Sen. Jim Bunning (R-KY)
Purpose: This act would amend another tariff act to make the International Trade Commission more powerful. So, this commission would be able to rectify China’s manipulation of their currency. Right now this bill is being reviewed in the Finance Committee (“S.796”).
Other Bills
There has been a bipartisan bill proposed on this issue by Charles Grassley (a republican) and Max Baucus (a democrat and the leader of the Senate Finance Committee). This bill intends to punish China for letting the yuan become more valuable than the dollar. This bill would impose bans and tariffs on Chinese products. The composers claim that this bill would not harm Americans. Apart from being about America’s economic interests, this bill would force China to trade fairly. China has no reason to be angry, because they are not in the right anyway (Weisman).
Another bill was proposed solely by a democrat (Christopher Dodd, chairman of the Senate Banking Committee). This bill would vilify China as a “currency manipulator,” turning to the International Monetary Fund and World Trade Organization for support. Once again, China would have to recognize authority and international laws (Weisman).
So far, 11 bills on trade with China have been brought to Congress, though none have been made into law (Morrison).
Ø Political Party Stances
In general the Republican Party has not done very much concerning altering trade with China (“Bush’s”). However, individual Republicans have proposed legislation, such as Senator Jim Bunning (“S.796.”).
According to the Democrat Party’s website, Bush has “failed to fight China's currency manipulation, and because of Washington Republicans' reckless fiscal policies, China is now the second largest holder of U.S. debt, with more than $260 billion in U.S. Treasury securities. President Bush has also failed to enforce fair trade laws, putting American firms and workers at an unfair disadvantage.” So, I figure they believe that the allegations’ against China’s unfair trading policies should be fought (“Bush’s”).
Ø Interest Groups
The textile and steel industries favor decreased trade with China, because it would mean for them a better market in America. As the article said, “they favor protectionism over free trade” (Dorn).
Other industries affected by trade with China include the automobile industry, which is losing jobs to Chinese manufacturers of auto parts (Scott).
Specifically, in December of 2004, General Motors brought a case to court, claiming a Chinese automobile company stole one of its car designs. It can be deduced from their actions, that this company is wary of trade with China and may even believe restricting trade with China until the Chinese government can properly enforce it (Morrison).
Some states are also dealing with the harsh consequences of trade with China. Michigan, for example, has lost 25% of its workforce in the past few years and unemployment has increased. Nationwide, 3 million jobs have been lost in the manufacturing industry. Because goods in China usually cost 40% less than those from America, people are losing customers to the Chinese (“Statement”).
Works Cited
“Trade With China: 2007.” US Census Bureau. 2007. US Census Bureau. 14 February 2008.
Weisman, Steven. “Paulson Urges Restraint in Policy on China Trade.” The New York Times. 11
September 2007. The New York Times. 14 February 2008. <>.
Bennett, Brian.“China’s Big Export.” Time. 13 February 2005. Time, Inc. 14 February 2008.
“Senators submit legislation to get tough on China’s trade policy.” Bnet. 2005. Kyodo News
International, Inc. 14 February 2008. <>.
Lewis, Neil. “Justice Dept. Announces Arrests in 2 Chinese Espionage Cases.” The New York
Times. 12 February 2008. The New York Times. 14 February 2008. <>.
“H.R.1002.” The Library of Congress. Library of Congress. 14 February 2008.
“S.796.” The Library of Congress. Library of Congress. 14 February 2008.
Dorn, James. “A Special Interests Victory.” Center For Trade Policy Studies. 26 April 1999.
CATO. 14 February 2008. <>.
Bush's China Policy Leaves American Workers Behind.” The Democatic Party. 24 April 2006.
The Democratic Party. 14 February 2008. <>.
Scott, Robert E. "China's Trade Policies Harm the U.S. Economy." Opposing Viewpoints: China.
Ed. David M. Haugen. Detroit: Greenhaven Press, 2006. Opposing Viewpoints Resource Center. Gale. Louise S. McGehee School. 14 Feb. 2008 <>.
Mouawad, Jad. "550,000 more Chinese toys recalled for lead.(Business/Financial Desk)." The
New York Times. 157. 54080 (Sept 27, 2007): C2(L). Opposing Viewpoints Resource Center. Gale. Louise S. McGehee School. 14 Feb. 2008 <>.
Raine, George. "China being asked to clean up its act; U.S. wants to impose safety standards for
imports of food, drugs and devices." San Francisco Chronicle. (Nov 28, 2007): C1. Opposing Viewpoints Resource Center. Gale. Louise S. McGehee School. 15 Feb. 2008 <>.
Morrison, Wayne M. “China-US Trade Issues.” CRS Issue Brief for Congress. 3 March 2005.
Library of Congress. 17 February 2008. <>.
“Statement of The Honorable Debbie Stabenow, U.S. Senator from the State of Michigan.”
Committee on Ways and Means.2 August 2007. The House of Representatives. 17 February 2008. <>.