The bilateral trade deficit with China is not evidence of a failure in the trading relationship between the United States and China.

• In a healthy and growing economy such as that of the United States, consumers simply have more money to buy more goods and services, including more imports. The trade deficit grows when our economy grows and shrinks when our economy shrinks.
• At its most basic level, the bilateral trade deficit reflects a difference in U.S. consumer and Chinese consumer purchasing behavior and purchasing power. For example:
  • Most imports from China are inexpensive consumer products that no longer are manufactured in significant quantities in the United States, such as low-cost apparel, footwear, radios, televisions, toys, sporting equipment and consumer electronics. These are goods that U.S. consumers desire and purchase in large quantities.
  • Most Chinese imports from the United States are expensive, high-technology goods, such as semiconductors, computer software, aircraft and transport equipment, pharmaceuticals, and medical devices and services, but China is a developing country that cannot use or afford many of the products we export. The United States does sell large quantities of these products to other countries — accounting for our bilateral surplus with many countries — and exports of these products to China are growing.
• In the first half of 2004, China had a global trade deficit. Despite its bilateral trade surplus with the United States, China is importing more than it is exporting overall.
• In the 1980s, global assembly of low-cost consumer items shifted to China from other Asian economies such as South Korea, Hong Kong and Taiwan. Growing imports from China do not displace U.S. goods; they displace imports from other Asian economies.
• U.S. consumers benefit from lower-priced imports. Increased tariffs on imports from China would result in higher costs for clothing, footwear and toys in the United States, which would weigh most heavily on working families.

China’s accession to the World Trade Organization (WTO) is not the cause of the U.S. trade deficit with China.

• The U.S. market was already open to Chinese goods before China joined the WTO. The United States did not make any new trade concessions to China when it joined the WTO. On the other hand, China did have to open its markets and reform its trade laws.
• WTO accession opened the Chinese markets to competitive U.S. exports, such as high-technology, capital goods; services; and agricultural products.
• Bilateral trade balances are not an indicator of openness to U.S. products. For example, the United States runs deficits with Canada and Mexico, which are almost totally open to U.S. exports thanks to the North American Free Trade Agreement.