U.S.-China trade deficit often deceptive

The record 2006 trade deficit between the U.S. and China should not be seen as the result of a "nefarious Chinese strategy," maintains a specialist on global trade from Duke University, Durham, N.C.

"Data on our trade deficit with China is deceptive and often misused," contends Gary Gereffi, professor of sociology and director of the Center on Globalization, Governance and Competitiveness. "Nearly two-thirds of China's global exports come from other countries' corporations that are operating in China. A majority of U.S. imports from China are actually being made by non-Chinese companies. The China trade deficit really reflects the state of the global economy: China is the world's factory and the U.S. is its supermarket. It's not caused by any nefarious Chinese strategy."

Gereffi says efforts to improve conditions in the U.S. by finding fault with China's monetary or labor practices are misplaced. Answers to American challenges are best found at home. "Pressing China to let the yuan appreciate--the current policy of the American government--even if successful, would contribute only slightly to an already steady U.S. economy," he argues.

"Far more fruitful would be addressing the anxieties of American workers about job security, retirement and health care with new ways of providing the social supports once found in pensions, lifelong employment, company health insurance, Social Security and Medicare.

"Cheap Chinese goods and labor have pitted the American consumer, in love with inexpensive goods, against the American worker, in fear of cheap labor. Unfortunately, these are often two sides of the same coin: America's workers are also its consumers. It's time to stop fighting with ourselves on this front."

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