For more information on the following story, contact Chu-yuan Cheng by e-mail at [email protected].
PROFESSOR: AMERICAN LABOR SHOULD PROFIT FROM EXPORTS TO CHINA
MUNCIE, Ind. – Opening China's markets should be a boon to the American economy over the next decade, says a Ball State University economist.
China is poised to gain full membership in the World Trade Organization, which will dramatically reduce the costs of exporting goods from the United States, said Chu-yuan Cheng, a Ball State economics professor.
Reducing tariffs, the surcharges placed on imported goods, should reduce costs and increase trade between the two nations. It should be a boon for American laborers, he said.
"Expansion of trade with China will generate employment in the U.S. transportation, distribution, retail and financial sectors," Cheng said. "Current American trade with China directly supports more than 200,000 manufacturing and service jobs. After China completes its accession to the WTO, increasing exports from America will add more job opportunities for U.S. labor."
He predicts the United States will contribute heavily to the $2 trillion in products exported to China over the next decade.
American manufacturing firms will rev up production lines and hire thousands of new employees in order to meet the expanding demand for airplanes, heavy machinery, autos and agricultural products, Cheng said.
Economic reform and a new open door policy in the 1970s and 1980s by China's communist government aided the expansion of trade between the two nations.
Total trade between the two nations rose from $20 billion to $85.4 billion from 1990 to 1998, according to the U.S. Customs Department.
By 1998, U.S. became China's second largest trading partner, next only to Japan. China is the fourth-highest nation receiving U.S. exports. American companies invested nearly $24.3 billion into the nation.
In the coming years, China's open door policy for foreign investment in telecommunications and financial services will offer U.S. firms a new opportunity to compete, Cheng said.
American auto manufacturers and farmers should also benefit in the next decade as China lowers the tariffs places on imported products, he said.
Tariffs on imported autos will drop from the current level of 80 to 100 percent to about 25 percent in 2006. Agricultural tariffs should drop to 14.5 percent or lower by 2004.
More than half of the top 500 American corporations already have invested in China, Cheng said.
"Free trade between China, which has the world's largest population, and the U.S., the world's largest industrial economy, will undoubtedly benefit both sides," Cheng said. "By 2020, China's population is expected to reach 1.6 billion and its gross domestic product will approach American levels. It will be the world's largest new frontier for American corporations as well as small- and medium-sized companies."
(NOTE TO EDITORS: For more information, contact Cheng by e-mail at [email protected]. For more stories, visit the Ball State University News Center at www.bsu.edu/news on the World Wide Web.)Marc Ransford11/13/00
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