For the last 30 years, 75 percent of the world has benefited from a phenomenal expansion in international trade. Until the 1970s, however, over 1 billion people sat on the sidelines of the international market, watching but not taking part, and consequently not reaping the economic benefits of trade. In the last 10 years, that one-fourth of the world's population has said to American businesses, many for the first time, ''Trade with us.''
All of these people are represented by only one nation, the People's Republic of China.
From 1954 to 1970, we did virtually no trade with China. When direct trade with China was resumed in 1972, products valued at $96 million were traded. Since that time bilateral trade with China has increased by 55 times, reaching $ 5.4 billion in 1981. Over 100 American companies now have offices in China and the United States is China's largest source of foreign capital, with investments in excess of $500 million.
Any trade relationship that expands so rapidly is bound to have a few ''growing pains.'' Disputes over US textile import policy and China's grain import obligations are the most obvious examples. Yet, when disagreements do occur, it is important for both sides to remember how far we have come in such a short time.
As our diplomatic and economic relationship has matured, US trade policy toward China has undergone periodic review. In 1982, a new export-control policy went into effect, easing restrictions on export licensing controls on technical products for sale to China. Before the new guidelines, the Department of Commerce approved $500 million in license applications for exports to China. In 1984, export application approvals are expected to exceed $2 billion.
This increase is characteristic of the changing composition of US-China trade. In 1972, 95 percent of our exports to China consisted of agricultural commodities. By 1983, agricultural exports were six times as large, but accounted for only 25 percent of our $2.2 billion exports to China. One reason for this shift in the composition of our exports is the result of increased Chinese demand for technology and equipment. And that's good. It means farm jobs , manufacturing jobs, service industry jobs, jobs in every sector of our economy.
Since 1979, China has adopted an economic program designed to modernize its industry, agriculture, national defense, science, and technology. This ambitious program looks toward quadrupling China's economic output by the end of the century. This program would require $100 billion to $600 billion worth of technology from the West by the year 2000. The United States can play a significant role in China's modernization plans. China needs a wide variety of our goods and services, particularly in the energy and technology sectors, sectors where we excel.
The potential for trade and investment in China is great, but several factors have in the past hampered our efforts.
Although our countries share many common interests, our systems of government and law are very different. Unfamiliarity with the Chinese system and legal uncertainties have made some US companies hesitant about doing business in China. The future of our economic relationship with China depends on our ability to design creative rules and procedures that will lead to an expansion of trade. Significant progress has already been made with the signing of bilateral agreements on trade, financial, and transportation matters. The Chinese have worked to clarify the rights of foreign investors by adopting statutory codes on joint ventures. The successful conclusion of an agreement on investment would go a long way toward putting into place the necessary institutional framework for greater future involvement by US companies in China's development.
The United States' interest in Chinese modernization goes beyond potential trade opportunities. An economically prosperous, secure China will contribute to worldwide stability, as well as enhance opportunities for American businesses. Both the US and the People's Republic of China recognize the many benefits that flow from increased interaction between our two countries. President Reagan's current visit is a clear demonstration of the importance and significance of a mutually constructive, long-term relationship with China. Expanding commercial cooperation will not only strengthen our trading partnership, but will also help build a better life and prosperous future for both our peoples. And that's good news for everyone.