Billions at stake in standoff

China a major trading partner for U.S., D-FW

04/10/2001

By Katie Fairbank / The Dallas Morning News

The United States has raised the specter of a trade backlash against China as the two countries engage in a test of wills over a downed American surveillance plane and its crew.

U.S. politicians cautioned Monday that the weeklong row is threatening long-term relationships between the two countries and could affect billions of dollars in trade. China is the fourth-largest trading partner for the United States, exporting $100 billion here in 2000, more than six times its imports of American products.

China also is the fourth-largest trading partner for Dallas-Fort Worth with $2.1 billion in imports and exports in 1999, about 10 percent of the area's foreign trade.

But local business leaders say they can do little but wait and see how the political standoff resolves itself.

"From Dallas' viewpoint, China is a tremendous opportunity for future trade. But there is not much at this level we can do," said Joseph Lake, director of the city's Office of International Affairs. "This is a national issue that will have a national impact. It needs to be resolved from both a political and business perspective."

Automated Food Systems entertained a delegation interested in its corn dog processing machinery just two weeks ago and would like to think that the current political situation would not affect sales.

"We think it could be a good market for our food equipment," said Wanda Walser, a co-owner of the Duncanville company, adding that she's keeping a close eye on the situation.

Some larger area companies with interests in China include Texas Instruments Inc., which is helping develop some wireless handsets, and Tricon Global Restaurants Inc., which operates Pizza Huts in the country.

On April 1, when the United States' EP-3E reconnaissance plane and a Chinese fighter plane collided, Kevin Cox was in Hong Kong as part of a group representing Dallas/Fort Worth International Airport.

Mr. Cox, senior executive vice president at D/FW, said the incident seemed less controversial at the time and didn't interrupt the conversations the airport was having with China Eastern and China Air Cargo.

"I don't think any of the individuals that we met with looked at it as something monumental or something that would become as large as it has become. Nor do I believe they thought it was an insurmountable issue," Mr. Cox said.

"Our first impression was that they're very desirous of engaging the U.S. in trade. At the same time, there are a lot of unknown commodities on both sides."

The problems resulting from the crash have intensified as the United States awaits the release of its 24-member crew. Also, China has placed the entire responsibility for the incident on the United States.

Political fallout

On Wednesday, 28 congressmen proposed legislation to revoke China's trade benefits in the U.S. market, and several lawmakers have canceled trips to China because of the dispute.

But no official trips to North Texas have been canceled. Chinese trade delegations visit the Dallas-Fort Worth area at least once each month. One group from the industrial city of Shenzhen is expected to arrive Tuesday to encourage economic development between the cities and partnerships with technology companies.

"We need both good business and political relations with the countries across the Pacific," Mr. Lake said.

President Bush said earlier in the week that free trade relations between China and the United States could depend on the outcome of the talks.

Politics have often been a stumbling block to China -U.S. trade. Issues such as free speech, political prisoners, the fate of Taiwan – which China claims – and a population-control policy that encourages abortion have all stymied the business partnership of the United States and China since President Richard Nixon opened relations nearly three decades ago.

The latest disagreement could cause problems for China's entry into the World Trade Organization. Congress must consider whether to extend normal trade relations with China if its entry in the WTO is not completed by June.

Financial impact

If trade relations were affected, Boeing Co. could be one of the hardest hit. Boeing – which is considering whether to move its headquarters from Seattle to Dallas-Fort Worth, Denver or Chicago – has forecast a market of about 1,800 commercial jet airplane sales in China. Those sales could be worth $124 billion over the next 20 years.

The impact could also be felt by other firms and farmers trying to sell to China. China is currently the world's second-largest market for cellular phones and the third largest for semiconductors.

"These are heartbeat industries for Dallas today, and these are the key exports for China in the future," Mr. Lake said.

Many believe the tempest will eventually blow over and trade will not be interrupted.

"Even before most-favored-nation status passed last year, businesses were doing a lot of business with China, and businesses will continue to do a lot of business with China because it's one of the biggest markets in the world," said Dan Swart, director of the U.S. Commerce Department's export assistance center for the Dallas-Fort Worth area. "I think politicians are posturing themselves, saying the things they have to say."

-- Anonymous, April 10, 2001

Answers

Which is the most important story, the China story or the Viatanase story, with our guys dying and them making demains?

-- Anonymous, April 10, 2001

"China is the fourth-largest trading partner for the United States, exporting $100 billion here in 2000, more than six times its imports of American products. "

i believe they owe us an apology for not buying enough american goods and thus thrusting us into the current situation.

-- Anonymous, April 11, 2001