State Councillor Tang Jiaxuan Meets with Governor of Iowa Thomas J. Vilsack and

On the morning of May 31, State Councillor Tang Jiaxuan met with Thomas J. Vilsack, governor of Iowa State of the United States, and his party in Zhongnanhai. Chen Haosu, CPAFFC president, and He Yafei, director general of the Department of North American and Oceanian Affairs of the Foreign Ministry, were present at the meeting.

Sino-US Relations

State Councillor Tang Jiaxuan said, China is the largest developing country, while the U.S. the largest developed country. To maintain friendship between the two countries is in keeping with the interests of the two peoples and conducive to peace, stability and prosperity in the Asian-Pacific region and the world at large. Since the start of the second term of the Bush Administration, Sino-US relations, on the whole, have maintained a momentum of sound development. The leaders of the two countries have kept in close contacts and communication with each other. This year the two heads of the state will exchange visits. It is the most important event of great significance in Sino-US relations of the year, and will surely greatly promote a new development in Sino-US constructive cooperative relations. The Chinese Government attaches great importance to and supports strengthening friendly contacts between the localities of the two countries. So far, 37 pairs of friendship provinces and 121 pairs of friendship cities have been twinned between the two countries. More and more friendly exchanges between the localities have made relations between the two countries closer.

Governor Vilsack agreed with State Councillor Tang’s appraisal of Sino-US relations, saying that Iowa attaches great importance to developing its relations with China, and has carried out many substantial exchanges with its friendship province, Hebei, in the fields of culture, education, etc.

Sino-US Economic and Trade Cooperation

Tang Jiaxuan said, since China and the United States established diplomatic relations, bilateral economic and trade cooperation has experienced considerable development. In 2004, bilateral trade volume was close to $170 billion, over 60 times more than the figure in 1979 when the two countries just established diplomatic relations. Now, the United States is China’s second largest trade partner and China the U.S.’ third largest trade partner and fastest growing market for its export. Iowa known as “the granary of the United States” and “the bread basket of America” boasts developed agriculture and animal husbandry. China has vast rural areas, but the output, quality and intensive processing technology of its agricultural products need to be further improved. Thus, the cooperation between Iowa and China in the agricultural field has a broad prospect.

Tang pointed out, when Sino-US economic and trade relations are rapidly developing and the scope of cooperation is continuously expanding, it is not surprising that there appear some frictions and differences. As to the problem of US trade deficits with China, the statistical figure got by the United States is double that by China. The gap is mainly due to the fact that the U.S. includes the volume of its transit trade with Hong Kong. On the other hand, among the Chinese products exported to the U.S., many are made by foreign-funded, including American enterprises in China. For example, the price of the Barbie doll made in China is $9.99 in the U.S., but its import price from China is only $2. The Chinese enterprises earn only $0.30 from one doll. Most of the profits are earned by American enterprises and intermediary business. Theoretically speaking, US trade deficits with China are the natural results of the industrial structure of the two countries and the international production division against the background of economic globalization; they are complementary deficits instead of competitive ones. The products that China exports to the U.S. are labour-intensive products, most of which are no longer produced in the U.S. With large amount of good quality Chinese products bought at low prices, the US consumers save about $20 billion every year, a huge palpable benefit to the American people.

The Chinese government pays attention to the US concerns and advocates that the two countries should persist in the principle of “development, equality and mutual benefit” in handling bilateral economic and trade relations and resolve the problems through dialogues and negotiations rather than resort to sanctions and bans at will. Politicalizing economic issues will not help resolve the problems; on the contrary, it will do harm to the interests of both sides. China’s principle for economic and trade cooperation is mutual benefit, win-win, common development and prosperity. We never pursue trade surplus with the U.S., and have taken measures to further increase imports from the U.S. In every of recent years, we have sent large delegations to the U.S. to purchase American goods. But the U.S. has imposed many restrictions on export to China, particularly high-tech products that China urgently needs. The fundamental way to solve the US trade deficits with China is that the US relaxes its restrictions on the export of high-tech products to China. At present, the two products that China imports most from the United States are soybeans and Boeing airplanes. In fact, China itself abounds in soybeans of high quality. To import soybeans from the US sacrifices the interests of the Chinese soybean planters. If it goes on like this, it will exert great pressure on the Chinese government and farmers. The special restrictions on some of the Chinese textile goods imposed by the US recently will affect the employment of 19 million Chinese workers. Tang hoped that after returning home the governor would convey China’s principled stand and concerns to the US personages of various circles.

Governor Vilsack agreed that trade disputes between the two countries should be resolved through dialogues and consultation. He said, he fully supports China’s entry into the WTO, and it is very important for both countries to carry out normal trade. He said, globalization has caused unemployment for many people in Iowa and they are very much worried about it. He expressed his welcome to Chinese enterprises, especially pharmaceutical enterprises, to invest in Iowa to create job opportunities for the local people, which will help ease their worries. He also informed about how Iowa tries to use soybeans in energy, fuel and furniture industries, and hoped to have cooperation with China in these areas.

Governor Vilsack and his party were invited to visit China by the CPAFFC and the Hebei Provincial Government.