A US$103 billion trade deficit with China that restrained US economic growth last year disguised sales gains for such companies as General Motors Corp, Boeing Co and Caterpillar Inc.
US gross domestic product expanded 2.4 percent last year, the Commerce Department reported Friday. The deficit with China, the most for any country in US history, also contributed to a record US trade gap of US$435 billion with all countries. The excess of imports over exports kept GDP from exceeding 3 percent.
While the deficit has led the US food and textile industries to complain that China must ease protection for its farmers and let its currency strengthen, companies that make automobiles, planes and heavy machinery are experiencing an expanding market in China's developing economy.
"For the next 20 years, our biggest trading partner will be China," said Starr Tavenner, China director for Boeing's commercial aviation division. Chicago-based Boeing, the world's largest aircraft maker, delivered 22 aircraft worth a total US$1.6 billion last year to China, where air travel is increasing.
Two-way trade grew after China, the most populous nation with 1.3 billion potential consumers, joined the WTO in December 2001. Membership committed China to welcome foreign companies as well as more imports.
"The market is huge, and they're importing a lot of capital goods," said Nicholas Lardy, a China specialist at the Brookings Institution, a policy research organization in Washington.
The US has a "very strong" advantage with those products, Lardy said. European rivals such as Airbus and Volkswagen AG are competing for a share of the Chinese market.
The US trade deficit with China widened by US$20 billion last year, the first year of WTO membership, boosted by a 22 percent gain in imports, Commerce reported last week.
Critics said the numbers prove that China gained the advantage from joining the Geneva-based trade arbiter.
"China's anti-market, beggar-thy-neighbor policies have been responsible for throwing hundreds of thousands of US workers out of their jobs," said Cass Johnson, vice president of the American Textile Manufacturers Institute.
His association represents Cone Mills Corp, Dan River Inc. and dozens of other US textile and apparel makers. They complain of low labor costs and an undervalued yuan that give China a price advantage of as much as 40 percent over US manufacturers.
Farm groups have complained to the George W. Bush administration that China's market for soybeans, cotton, wheat and other agricultural goods continues to be protected.
US exports to China nonetheless rose last year, and the 15 percent, US$3 billion gain was the most among the 10 largest buyers of American-made goods. Exports fell to seven of those countries, including Canada, Mexico and Japan. Each of the two other increases, to South Korea and Taiwan, was less than 2 percent.
In contrast with shipments to China, US exports of goods to all countries fell almost 5 percent lat year, amid an economic slowdown in much of the world.
"They're buying more enthusiastically than any of our other trading partners," said Edward Gresser, a US trade official in the Clinton administration, now an analyst at the Progressive Policy Institute, a Democratic-supported group that challenges traditional party positions on trade and other issues.
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