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U.S. Goes Low-Tech On China Exports

April 22, 2010

Over the past decade, trade between the United States and China has grown dramatically while also becoming significantly more imbalanced. The United States ran a bilateral trade deficit with China of over $225 billion in 2009, compared with a $69 billion deficit in 1999. One factor contributing to this imbalance is U.S. export controls on certain high-tech products deemed important for national security. As illustrated in the chart above, the United States now exports to China relatively less machinery and relatively more crude materials, such as scrap metal, than it did a decade ago. China’s president Hu Jintao has urged the United States to relax technology export controls for years. The Obama administration is starting to push to do just that, in line with its goal of doubling exports in five years. U.S. Secretary of Defense Robert Gates has bluntly observed that “America’s decades-old, bureaucratically labyrinthine [export control] system does not serve our 21st-century security needs or our economic interest.”

Department of Commerce: 2010 Report On Foreign Policy-Based Export Controls
Milken Institute: Jobs For America-Modernizing Export Controls
Dreazen, Pasztor: Plan Would Revamp Export Controls
Reuters: Hu Says China Will Stick To Its Own Yuan Path

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  • Posted by Michael Wessel

    This argument simply does not bear up under a factual analysis. The US-China Economic and Security Review Commission has heard testimony from Administration officials that those items subject to export controls are but an exceedingly small percentage of the products we could export. Indeed, the official testimony was: “I’ve seen some of the press reports that have mentioned the Chinese argument that we should liberalize our export controls as a way of addressing the trade deficit…Let me start off by saying that what we control has a very, very small impact on that deficit, so that certainly isn’t a way to go about it.

    The real problem is China does not want to allow access to its market for our competitive products.

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