If China Trade Opens, Who Gains? ; If It Passes the Senate This Week, Cellphone Marketers Would Be among Winners, Industrial Workers the Losers

Article excerpt

On one side of Baltimore harbor, Ellicott Machine Corp. is putting the final touches on a package of heavy-duty dredging equipment to make Chinese ports navigable. Sales to China, says chief executive Peter Bowe, are a key to the future for the company, which once made equipment to dredge the Panama Canal.

Across the harbor, Ronald Allowatt sees it differently. "The more we compete with people making 20 cents an hour, the more we're going to be out of work," says the president of the United Steelworkers Local 2610.

As Congress prepares to vote - perhaps as early as Wednesday - on permanently normalizing trade with China, these contrasting views frame a national debate over whether the action will help or hurt the US economy.

To those who see globalization as an irresistible force, pulling 1.2 billion Chinese into the world market can only open possibilities for US businesses. Others say the US economy is so big, relative to the amount of additional goods sailing for China, that the overall effect will be small - and possibly not worth the loss of hundreds of thousands of American jobs.

"It's all baloney. The [export] numbers are not worth anything," says Clyde Prestowitz of the Economic Strategy Institute, a Washington think tank. Even if the US doubles its exports, he says, the new business will have a negligible impact on the $8 trillion American economy.

Important sectors of the work world, meanwhile, are polarized over the China trade vote. Unions, led by the AFL-CIO, say imports of Chinese goods, everything from toys and shoes to light electrical machinery, will put its members on the unemployment line. They have an ally in the textile industry, which says it could lose more than 150,000 jobs.

"There are a lot of industries that ship parts made in the US to China and then re-export it [from there], such as telecommunications, semiconductors, and hardware," says Bill Rhodes, an investment strategist who's seen a list of US companies that plan to relocate plants to China. "Now they'll close those factories, and the whole item will be manufactured in China," says Mr. Rhodes, chief investment strategist for the Williams Capital Group, a New York investment bank.

But some captains of industry dream of vast new opportunities. Citrus farmers envision a huge new market for orange juice. The telecommunications industry sees big potential for cellular phones. Lawyers and insurance companies talk about setting up offices in the hot spots of Chinese commerce. The US government reasons that because China will be required to reduce tariffs on many products, export opportunities will expand.

If Congress approves the trade bill, estimates are the move could pare the US trade deficit with China, which is running at $60 billion annually, second only to Japan. Goldman Sachs, a New York investment bank, estimates US exports will grow to $27. …


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