WCA July 2007

From the Americas

But one exhibitor pointed out that abundant information in Chinese about foreign markets could now be found on Internet sites run by Alibaba.com, based in Hangzhou, and by various government agencies. And, while foreign companies were invited to show their wares at the fair, they were relegated to the remote top floor of just one of the more than 30 halls that the trade fair fills at the city’s two convention centres. According to the Times’s Mr Bradsher, only 18 American companies attended, most of them little known and with small booths.

Trade

China’s exporters are looking beyond the American market To judge from recent trends in the Chinese export market, the importance of the US consumer to Chinese manufacturers has dwindled. With the support of the government in Beijing, Chinese companies are using trade missions and trade fairs as a springboard for expansion into the markets of many rapidly growing economies. The Americans in the equation are not customers but competitors. Reporting from what is still called the Canton Fair – held in Guangzhou, China, in the spring – Keith Bradsher of the New York Times noted that Chinese business representatives mentioned such factors as weaker growth in the American economy, rising protectionist sentiment in Washington, and the decline of the dollar against China’s yen. This last development, energetically sought by US President George W Bush, makes it more expensive for Americans to buy Chinese products. (“China Leans Less on US Trade,” 18 th April) Accordingly, Chinese producers see their fastest growth these days as lying in Europe, Africa, the Middle East, South America, and elsewhere in Asia: “Practically anywhere other than the United States,” said Mr Bradsher. While the Chinese exporters perceive much less protectionist sentiment in Europe than in the US, currency fluctuations may be a more important element in the new commerce. In February, the rise in the value of the Euro pushed China’s exports to European Union countries past its exports to the US for the first time. The Hang-zhou Jilin Machinery Co, which makes screwdrivers and other tools, was cited by the Times as an illustration of the effect of currency rates on one Chinese company’s finances. Its American sales have remained basically flat, while those to Africa, Europe, the Middle East, and especially Australia are on the rise. Zhao Wei, the company’s sales manager, assigns much of the blame to the dollar’s lower value against the yen. Officials in Beijing raised the value of the Chinese currency by 2.1% against the dollar in July 2005, and have let it drift up 5% more since then. While the shift in Chinese exports away from the US has been underway for some time, the question arises whether the present regime in Beijing is actively promoting the trend. Wang Tongsan, a senior Chinese economic forecaster and member of a committee of experts overseeing the current five-year plan, told the New York Times that the government did not have a policy of pushing exporters to focus on markets other than the United States. He attributed the rise in sales to developing countries to the strong entrepreneurial talents of many Chinese business people. Several exporters at the China Import and Export Fair (the re-named Canton Fair) said they had not been told by the Commerce Ministry to reduce their dependence on the American market. ❖ “It’s a big problem,” Ms Zhao told the American visitor.

South Korea and the US sign a bilateral deal that strengthens America’s position in Asia

The free trade agreement reached by the US and South Korea on 2 nd April was a rare and welcome triumph for the administration of President George W Bush, which has been struggling to sell an opposition Democrat-controlled Congress on bilateral trade pacts with Panama, Peru, and Colombia. The high-profile deal struck with Seoul, a first with a major Asian economy, is Washington’s biggest since the tripartite (US-Canada-Mexico) North American Free Trade Agreement took effect in 1994. When ratified by Congress, the new pact will immediately remove tariffs on more than 90% of all goods traded between the US and South Korea, American officials said. It could add as much as $20 billion to that trade, estimated at $78 billion in 2006. In return for opening up its market, which had offered only restricted access to such important American products as cars, South Korea will gain an opportunity to boost its export-driven economy. In the first year under the pact, South Korean exports to the United States are expected to rise by 12%, some $5.4 billion. Potential gains to the American economy range from $17 billion to $43 billion, and would help narrow the large US trade imbalance with South Korea. More broadly, the agreement ‘highlights the United States’ strong commitment to active engagement and partnership throughout Asia,’ said deputy US trade representative Karan Bhatia. Reading between those lines, and the jubilant announcement of the pact by Mr Bush, will disclose an important subtext. The newly cemented relationship between the US and South Korea – the world’s largest and eleventh-largest economies, respectively – offers the US a position in Asia from which to counter the growing influence of China throughout the region. While Washington has actively pursued bilateral pacts in Asia, its talks with Malaysia are stalled, and deals with Japan and with China itself are considered unlikely.

Manufacturing

New industrial/labour alliance comes out swinging – against China and the National Association of Manufacturers An unusual alliance of top US manufacturers and the United Steelworkers labour union (USW) has introduced itself by taking a strongly confrontational stance toward China,

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Wire & Cable ASIA – July/August 2007