US firms in China hope thaw will warm up trade
Boston — The recent Chinese-American communique on the sticky issue of Taiwan brought a sigh of relief to the diplomatic community. US companies operating in the People's Republic of China (PRC) aren't cheering yet. But they hope it will ease their on-site problems.
Doing business in China has never been easy for American companies. Lately, however, it has been even more difficult for some.
''When we are over in China, we don't need to turn on Voice of America to know that President Reagan has said something that offended the Chinese, or that Barry Goldwater is in Taiwan. We can tell from the way they treat us in the dining rooms in our hotels and in the factories,'' said a spokesman for a company that gives contracts to Chinese plants to manufacture its products.
In the Aug. 16 communique, the United States agreed gradually to reduce its arms sales to Taiwan, and China agreed to seek reunification with Taiwan by peaceful means.
Whether American business representatives in China also find their work more peaceful remains to be seen. In recent months, some claim to have had harassment. Reports include:
* Three foreign experts - Americans hired to teach English in China - were picked up by the security police. They were released within a day.
* One foreign business person visiting another at a hotel must sign in, indicating the Chinese have stepped up their watch on foreigners.
* Chinese officials have become hesitant to grant multiple-entry visas to American business people. With single-entry visas, they can't return quickly to China if production problems arise, but must be invited back into the country.
American companies producing goods in China say they can't always pinpoint why they have production problems.
''It would be difficult to tell what would be a slowdown, and to what degree it's caused by political strain or by bureaucratic and distributional breakdowns ,'' says Carlton Curtis of Coca-Cola.
David Chang, vice-president of Nike Inc., concurs. ''You can't say the Chinese snarl us up in red tape just because they're angry at the US government. It's been difficult to trade with them from the outset'' - for Nike, makers of running shoes, that is since August 1980.
According to an official at the US Department of Commerce, politics has had no effect on the level of business activity.
''China's level of trade depends entirely on its economic need, not political conditions,'' the official said. Before the communique was released, the Commerce Department ''tried to monitor the effect of the (arms) disagreement on individual companies, and found that politics was not a factor. So we don't think the communique will alter trade from its present level.''
At the moment, two-way trade between the US and China is not large. It was only $5.5 billion last year, compared with $86.4 billion with Canada, the United States's largest trading partner. But the ''China trade'' has grown an average of 54 percent a year since 1979.
If politics does not enter in, however, it is hard to explain why US exports to China were off 14 percent during the first five months of this year, according to statistics from the National Council on US-China Trade.
Here's what business and government experts think about the future of individual industries.
Agriculture: The Chinese have been shifting to other nations for some of their farm product imports. Between May 1981 and '82, US agricultural exports to China, the lion's share of its exports there, plunged 18 percent.
US cotton exports to China will alone probably drop more than 30 percent this year, to 600,000 bales, according to the Department of Agriculture. China has not bought any cotton from the US since October. And the Chinese are expected to have a record cotton harvest, 14.5 million bales, this year.
Some experts think China is trying to pressure the US government - through agricultural lobbyists - to increase quotas on Chinese textile imports. If the Chinese don't like the results of current negotiations on a textile agreement with the US, they might buy even less US agricultural goods.
Consumer goods: ''The PRC will not become a consumer economy in the foreseeable future,'' predicts Preston Torbert, a Chicago lawyer dealing in Chinese law and trade.
''The state wants high-technology goods. I doubt it will allow its limited foreign exchange to be spent on American toothbrushes or lipstick.''
Light industry: Equipment for Chinese plants, especially those producing exports, is always in demand.
''Based on the number of inquiries, things have definitely picked up,'' says Donald Altman of Altman Inc., which represents US machinery manufacturers in China. ''But that happened weeks ago, when their 'readjustment period' ended. Projects that had been on hold are being started.'' Because of a shortage of foreign exchange and other reasons, China at the start of this year canceled or delayed numerous projects involving foreign corporations.
High-technology goods: The future of high-tech exports rests in the US government's hands.
''We've seen a 40 percent slowdown since January,'' notes Russell Lowe of China Translation and Printing Services, which provides translations to companies, many of them producing high-technology goods, that trade with China.
''Some of it is the US economy. But most is because the US government, with its pro-Taiwan attitude, is reluctant to license high-tech goods for export to the PRC.''
Mr. Lowe doesn't expect high-technology exports to take off, though. ''The political hurdle has been removed. But it will take time for the joint communique to filter down through both bureaucracies. You'll see things moving around late September at best.''
Petroleum products: ''Energy is China's No. 1 priority,'' notes an official at the Commerce Department's China desk. ''No matter what happens to diplomatic relations, oil-related products will always be strong.''
Even with improved diplomatic relations, economic relations may take a peculiar twist.
''The Chinese are going through a complex calculus of their own,'' notes Roger Sullivan of the National Council on US-China Trade. ''You may see them throwing their trade to West Europe in the future. They feel too dependent on Japan, and to some extent on the US.''