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Editorial: The merits of working with China

BY DI EDITORIAL BOARD | JULY 28, 2014 5:00 AM

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It’s fair to say that Americans have mixed feelings about China, and for good reason. It should be concerning that China’s government is directing economic espionage against some U.S. businesses, not to mention China’s rapidly expanding economy, expected to eclipse the United States as early as this year, according to projections from the World Bank. Nevertheless, many Americans seem to recognize the potential that a partnership with China holds.

According to a report by the Pew Research Center, released earlier this month, 51 percent of Americans think it’s more important to build a stronger relationship with China, whereas 43 percent believe it’s more important to get tough on China. These proportions have roughly returned to their 2011 values, following a dip in support for stronger ties with China in 2012.

Although it may be tempting and emotionally appealing to take a hard-line approach when dealing with China, such a stance would waste enormous opportunities that both nations stand to gain.
Fortunately, American ambivalence toward China hasn’t stopped Iowa from building trade relations with East Asia’s rising economic powerhouse.

In June, Iowa signed a cooperation agreement with the China Ministry of Commerce, which the Des Moines Registerreported “calls for cooperation on areas that are Iowa’s strengths, including agriculture, wind energy, biofuels, and finance.” The Chinese also agreed to buy $100 million of soybeans in that same agreement, which is actually much smaller than a 2012 deal in which China purchased $4.3 billion of Iowa soybeans.

The U.S. Department of Agriculture also reported that in 2013, China purchased 20 percent of all U.S. crop exports, a record $26.7 billion. The potential for even more trade with China and the rest of the world will only grow as more developing countries such as Brazil, India, Nigeria, and others begin to massively expand their economies.

These often overlooked opportunities for exporting goods offer a remedy to many policymakers who remain skeptical about the U.S.-China trading relationship. Data from the U.S. Census Bureau showed that in 2013, the U.S. trade deficit with China had reached around $320 billion. Worrisome, yes, but there is a way around that.

The Congressional Research Service reported earlier this month that China is the United States’ second largest trading partner and third biggest export market, with a potential market for American companies of an estimated $300 billion. The report also noted that from 2010 to 2013, General Motors actually sold more cars in China than in the United States.

Clearly, American companies have the potential to rack up exports and invest in the Chinese economy, benefiting both the United States and China.

Regardless, this hasn’t stopped some from using a widespread, reactionary fear of China to rile up the American public. Yes, the Chinese economy is going to be bigger than the U.S. economy in the near future, but this isn’t something to panic about. China’s population, after all, is more than four times larger than ours. The United States still holds a hugely disproportionate share of the global economy, given its population.

Even so, it doesn’t make a lick of sense to pick fights with China. Given our mutually dependent economies, we have a lot to gain by working together. We don’t have to agree on everything or even most things, but a little cooperation will continue to prove extremely profitable for both countries.


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