Since the beginning of 90’s，Sino-U.S. economic and trade cooperation and development have been at high speed，although the bilateral relations remain at a low tide and the development has gone through ups and downs or even some big setbacks. According to the statistics by Chinese Customs，the bilateral trade value in 1990 was $ 11.77 billion，in 1998 it was more than doubled，up to $54.9 billion. The U.S. Customs statistics show that the U.S. -China trade value in 1990 was $ 20 billion and in 1998 it was also more than doubled，at $85.4 billion. In 1998 the total value of China imports and exports went down by0.4% while Sino-U.S. trade value went up by 12%. The China export value of that year grew only by 0.5%. In contrast，its exports to the U.S. increased by 16%. This year，China export value from January to June was 4.6% lower than that in the same period of last year，but the exports to the U.S. were 8.4% higher than that in the same period. The development of Sino-U.S. economic and trade relationship is very fast，its scale and speed are rarely seen and can not be orchestrated at one’s own will. These constitute the main current of Sino-U. S. economic and trade development.

According to Chinese statistics，in 1979，the U.S. surpassed Germany and became China’s third largest trade partner；in 1996 it became the second largest trade partner leaving Hongkong behind. According to the U.S. statistics，in 1980 China only ranked the 24th among the U.S. trade partners. In 1996 China turned out to be the U.S. fourth largest trade partner，next to Canada，Japan and Mexico，which is still the case now. The U.S. statistics（including the reexport through Hongkong）tell that the U.S. is China’s largest trade partner and is the largest overseas market for Chinese products. China’s exports to the U.S. in 1998 reached $ 71.2 billion，accouting for 38.72% of the $183.7 billion worth of China’s total export of that year and for 7.79% of the $913.8 billion worth of the U.S. total imports of that year. From 1990to 1996，the statistics made by both sides suggested that the U.S. export value to China increased by over 16% per annum，much higher than the increased U. S. total exports of that period（See the table below）. In 1994，the U.S. Department of Commerce put China as number one among the 10 world largest newly emerging markets.

Bilateral Trade Statistics From China and The U.S.

With the rapid development of bilateral trade comes the great increase of the U.S. investments to China. The U.S. business investments to China commenced in 1980 The U.S. actual business investments to China from 1980 to 1991 were $2.704billion. Since 1992，the U.S. business investments to China，by the U.S. large multinational companies in particular，has developed rapidly. From 1980 to the end of July 1999，the U.S. business investments involved 27814 items，the contracted investments valued at $49.81 billion and the actual investment at $23.67 billion. The items involved by the U.S. business investment in China are distributed in more than 20 provinces，cities and autonomous regions. The investment ranges over wide fields，through machinery，metallurgy，petrol，electronics，communication，chemistry，textiles，cars，light industrial products，food，agriculture，medicine，hotels，real estate and services，etc. Since 1992，more and more U.S. multinational companies all have been optimistic about Chinese market. Out of the 500 big enterprises evaluated by the U.S.＜Fortune＞，over 200 of them have investments in China. The U.S. business investments in China were featured by large scale，higher technological level，strong capability of technology development，high management level，training of employees and labour protection，etc. They have been a positive boost in promoting China to increase the technological level of its related industries and to improve the product quality for its consumers. Most of the U.S.-invested enterprises have enjoyed good economic benefits and high investment return.

There is a strong economic and trade complementarity forthe two big countries. Both can share each other’s big market and increase each other’s competitiveness in the world market through cooperation. More than 20 year’s of bilateral economic and trade cooperation has played an evident role in the economic development and the enhancement of people’s living standards of both countries. As the 1994 World Bank report points out，if the U.S. imports the same products from other countries other than China，the U.S. consumers will increase their expenditure by $14 billion annually. As to China，several millions of workers along the coastal areas are engaged in the industry of processing export products to the U.S.，thus pushing the economic development of those areas. In fact，the Chinese advantage of labour-intensive industry agrees with the U.S. advantage of technology and capital-intensive industry. Strengthening and expanding the economic and trade cooperation between the two countries will not harm the economic benefits of each others’industries，instead they can create many opportunities for the enterprises on both sides. The development of Sino-U.S. economic and trade cooperation is beneficial to thriving the two countries’ economy. A long and steady development of bilateral economic and trade cooperation complies with the fundamental interests of China and the U.S.

Sino-U.S. economic and trade development has never been smooth sailing. Because of the differences of both countries insocial system，ideology，value of life and social customs，and particularly because of the worsening of Sino-U.S. relations since 1989 and political interruption from right-winged pro- Taiwan conservatives both inside and outside the U.S. Congress，the Sino-U.S. economic and trade relations are subject to and develop in frictions and disputes which come one after another. The main obstacles and disputes that affect and check the further development of Sino-U.S. economic and trade relations lie in the following issues over sanction against China，high-tech export control，MFN treatment，intellectual property rights，market entry，trade balance，restoration of China’s membership in GATT and its entry into WTO，textile trade，the exportation of labour products，TCK，anti-dumping，etc.

The frictions and disputes over economic and trade benefits mainly fall in the area of economic benefits among some industrial sectors and grassroots enterprises，nothing related to the national fundamental interests. They can be settled through negotiation on equal basis，which has been fully proved by the past experience. And these frictions and disputes are the minor issues in Sino-U.S. economic and trade relations. They should not affect the main issues of the bilateral economic and trade cooperation. As the two countries have more and more engagement in the economic fields，the issues that could trigger disputes will also be on rise. Whenever frictions and disputes occur，both sides should standhigh and look far；both sides should deal with them cautiously in the interests of Sino-U.S. economic and trade relations，so as to avoid intensification and runaway of the conflicts and to keep cooperation. Equality and mutual benefits are the basic premise for economic and trade development，the complementarity of advantages is the important condition for economic and trade expansion，and friendly negotiation is the effective means to settle frictions and disputes. Imposing sanction or threatening with retaliation at discretion is not acceptable，it both violates the principle of multilateral trade system and works against the effective settlement of disputes with the result of making it more complicated. The consequence of trade war will only injure both sides，neither side will get any pay. What’s more it does harm to the countries and regions which are closely related to Sino-U.S. bilateral trade and will only provide” unexpected benefits” to the other countries. Hence，it will not enlist popular support from people in the business circle. MFN（Most Favoured Nation treatment）is the basis for China and the U.S. to make economic and trade cooperation，is a normal trade relation.（On July 23，1998，the U.S. formally changed MFN to normal trade relations.），and should be unconditional and permanent. This is the fundamental principle stipulated by GATT and WTO. The annual review can hardly provide a steady，healthy environment and atmosphere for Sino-U.S. economic and tradedevelopment. Every year from 1990 to the September of 1998，there was a debate on China’s MFN treatment among the U.S. Republicans，Democrats，Congress，the commercial and industrial circles，government brains and many people both inside and outside the government. The debate has drained much energy and money of the many American taxpayers and has throughly revealed the struggles for the partisan and personal interest within the Congress. However the result was the extension of MFN year after year，for it complies with the national interest of both countries.

According to the U.S. statistics，the U.S. trade deficits with China was $33.8 billion and rose to $ 57 billion in 1998. According to the Chinese statistics，China’s trade surpluses with the U.S. was $8.6 billion and rose to $21 billion in 1998. How shall we look at the trade imbalance between China and the U.S.？

First，a main feature of Sino-U.S. trade is that processing trade takes a large proportion of China’ export to the U.S. In 1997 processing trade accounted for 72% of China exports to the U.S. This means that China only gains a small amount of processing fees. For example，Babe dolls are very popular in the U.S. market，its selling price is 9.99 dollars，but its import price is only 2 dollars per unit. The raw materials come from the Middle East and are processed into semi products in Taiwan；thewigs are manufactured in Japan；the packing materials are supplied by the U.S. These three parts total 1 dollar，out of this one dollar comes 0.65 dollar for transportation and management fees，China only gets 0.35 dollar for processing fee. Under the rule of origin，the two-dollar unit price was put into China’s export value to the U.S.，which can not accurately show the actual trade performance between the two countries.

Second，China attracts 78% of its investment from East Asia，67% from Asian four dragons，thus producing the” transferred effect of trade balance” . In accordance with the statistics of the U.S. Department of Commerce，during the eight years from 1987 to 1995，the U.S. trade deficits with the Asian four dragons were reduced from $34 billion to $7.8 billion，in the meantime，the U.S. trade deficits with China increased from $2.8 billion to $33.8 billion. The reduction and the increase are caused by the fact that the Asian four dragons have shifted their production activities to China. They have achieved fat profits，but the trade deficits to the U.S. are shifted to China.

Third，Sino-U.S. trade relations are represented in four areas at least：merchandise trade，technology trade，service trade and mutual investments. The oft-mentioned deficits refer to the merchandise trade deficits. The U.S. trade advantage with China is just reflected in the other three areas. Up till the end of1998，the U.S. actual investments in China reached $ 21.4 billion with most of the investments put to the establishment of enterprises and factories. Motorola is just the case in point. Motorola sets up factories in China，sells its products locally，it actually replaces China’s import of mobile phones from the U.S. By making money through investments in China and remittance of profits back to the U.S.，the U.S companies have actually reduced the U.S. trade deficits to China. Chinese companies only invest more than $0.4 billion in the U.S.，mainly focusing on the service area. Thus，it is evident that the U.S. investments in China，as a matter of fact，offset the U.S. merchandise trade deficits with China.

The daily consumer goods imported from China are at low price but of good quality and are mainly labour intensive products. This is the result of the U.S. full use of other countries，lower cost labour and resources as well as its active participation in the international labour division. It helps the U.S. with its domestic inflation control and economic development，it is a necessary complement at the time when the U.S. continues to adjust its economic and industrial structures to high- tech fields.

Since the summer of 1989，the U.S. has imposed sanction against China，implementing a discriminatory export management towards China. Some high technology and high-tech equipmentneeded in China’s modernization program，especially some technological equipment both of military and civilian usage are under strict control，even some technological items have to be approved by the President. This inflicts a serious impact on Sino- U.S. expansion of economic and trade cooperation，greatly limits the export of the U.S. enterprises to China；it has very negative influence upon the high-tech investments of the U.S. enterprises to China and becomes a main obstacle in developing and expanding Sino-U.S. economic and trade cooperation.

From 1981 to 1983，Sino-U.S. relations were once in a trouble，causing the reduction of bilateral trade value from 1982 to 1983. On 21 June，1983，for the political and economic need，the Regan Administration decided to move China from Group P to Group A in the list of countries under technology export control，putting China into the big group of non-aligned friendly countries with the U.S.（like Egypt，Yugoslavia and others.）On 23，November of the same year，the U.S. government extended its green area of technology transfer to China to 32 categories. The released control of technology export led to the fast growth of the U.S. export value to China. The U.S. Department of Commerce made statistics that the U.S. high-tech equipment exported to China rose from $0.6 billion in 1982 to $1.7 billion in 1988，the total value within these seven years accumulated to over $8 billion. On 28，February of 1989，not long after Bushcame into power，the U.S. Department of Commerce further released its restrictions on technology export to China. The newly exportable products ranged through 13 categories. Later，for the well-known reason，these 13 categories of technology equipment were not exported to China.

At present，China is speeding up its modernization. Every year，China imports from Western developed countries several billions or even tens of billions worth of advanced science and technology as well as equipment. Because of the U.S. government’s sanction against China，a large number of orders from China slipped away from the hands of the U.S. big enterprises. In contrast to this，other Western developed countries successively cancelled discriminatory export restrictions on China and provided China with government loans，thus greatly boosting their export to China. Quite a lot of EC countries do not run trade deficits with China. Italy and France ran $1.12 billion trade surpluses with China in 1997. The U.S. contradicts itself in that on the one hand it emphasizes on the issue of deficits with China while on the other hand it does not release its export restrictions on China. But the U.S. discriminatory export control policy can not prevent China’s progress towards modernization. Nowadays，a relatively great deal of technology and equipment can be introduced from other developed countries other than the U.S. Besides，with the continuous enhancementof China’s own technology，many high-technologies can be successfully developed by ourselves. Our space technology（the Great Wall rocket range），man-made communication satellites，biogenetic engineering and the Milkyway powerful computer system etc. have already reached world advanced level. The U.S. enterprises with high technologies can only look helplessly at the flow of fat trade opportunities out into the other countries. A newly emerging market of China for merchandise and capital is handed over to the European Union，Japan and other developed countries. Some Congressmen represented by Cox made troubles on the transfer of high technologies to China and was actually damaging their national interests under the cover of protecting the U.S. security.

The Clinton Administration has indicated for several times to greatly make up and improve its relations with China. It is important to put words into action. What the Reagon Administration had done to improve its relations with China by way of releasing export control on China is a good example for the Clinton Administration to follow，this also goes in line with the U.S. political and economic interests. It is our hope that the U.S. government will keep its promise to firmly support China to enter WTO within 1999. Developing Sino-U.S. economic and trade cooperation is in compliance with the fundamental interests of both nations. The development of bilateral economic and traderelations have become and will continue to be the tie between the Chinese and American peoples.

Within the next seven years from 1999 to 2005，in order to meet the need of modernization，Chinese import value will exceed $1，500 billion. The year of 1999 has already seen the obvious increase of Chinese imports. As long as the Clinton Administration can get rid of interference，completely lift the outdated sanction against China and greatly relax its export control on China，the big and medium-sized U.S. enterprises will have the ability and possibility to capture more share of China’s rapidly developing new and big market. If so，according to the U.S. statistics，by 2000，the U.S. -China trade value is expected to reach $100 billion，the U.S. actual business investments in China could arrive at $25 billion. The combination of the U.S. capital，technology and management with China’s huge market，low cost labour and resources will bring tremendous benefits to the economic development of both countries and will help revitalize their own economy. The smooth development of Sino- U.S bilateral trade must be sheltered in good bilateral relations. The maintenance of a steady bilateral relations and creation of a good environment of economic and trade cooperation for both countries，enterprises are the inevitable obligations of both governments.