U.S.-China Trade

from the China Balance Sheet:

 China’s economic modernization has lifted almost  400 million citizens out of poverty since 1990, but  415 million Chinese still live on less than $2 per  day.

China is working to review oil policy and strategy to determine the most favorable path forward to “bolster” oil company profits and avoid [prolong]  rising fuel costs. One large driver for this effort is the upcoming Olympic games, which has been a sore spot for the country politically and logistically these past several months. Ensuring a plan is in place to pre-emptively manage whispers of inflation prior to its Olympic debut is on its shortlist of initiatives. The Sichuan earthquake and impacts to Consumer Price Index (CPI) is another factor making for a delicate decision making process.

The most viable of proposed paths is the suggestion to relax windfall production profit tax, lessening the burden on China’s heavy hitter producer PetroChina and champion refiner Sinopec. Two years ago, a tax was established to charge domestic crude oil producers 20-40 percent of revenues at oil prices above $40 a barrel. The relaxed tax policy would raise the point of taxation to $60 a barrel, and is estimated to preserve “up to $6 billion in revenue on China’s 1.36 billion barrels of annual output.”

Other considerations included leveraging local fuel supplies through cutting the costs of imports or raising those of exports.

Chinese domestic prices are far below global rates for fuel. In the past two years, China has only raised domestic prices twice, the most recent spike being 10% last November. Crude oil has come up 39% against China’s 10%. To better demonstrate the widening gap, what about this statistic:

Beijing would have to increase its retail diesel price by 50 percent and gasoline by 25 percent to match that of the top consumer in the United States, where consumer fuel taxes are similarly low.

Reuters has reported that China has the financial “wherewithal” to hold out for awhile before having to address aligning its fuel prices with market rates. Though it’s the ultimate objective, the Chinese government is doing everything in its power to implement this at a measured pace.

In response to the May 12, 7.9-magnitude earthquake in Sichuan, Washington is stepping-up to help China in its aftermath. Most impressively, the US seems to be sharing lessons learned from domestic challenges in 2005 with Hurricane Katrina recovery efforts, and is pitching in with this act of good faith to show strength in partnership.

The Statistics:

Disaster Assistance:

• USAID provided $500M USD to the International Federation of Red Cross and Red Crescent Societies via the US Embassy in Beijing. The aid was for procurement and delivery of emergency relief commodities.
• American urban rescue workers from local fire brigardes (Los Angeles, CA and Fairfax County, VA) flew into China to perform “heavy rescues” to recover trapped and injured persons using state-of-the-art technology like diamond-tipped chain saws, generators, and oxygen-gasoline torches. In addition to manpower and expertise, equipment and training were provided in this effort.
• US aid also includes satellite images of resrvoirs, roads, and bridges sustaining damage as a result of the earthquake.
• Network for Good raised more than $215,000 for earthquake victims.
• The Bill & Melinda Gates Foundation has donated $1.3 M to the China Ministry of Health for safe water and disease control activities.

The challenge now is providing adequate coverage for China’s internally displaced persons. The earthquake displaced approximately 5.4 million people, according to Sichuan provincial authorities.

CHINA - A student sits in the shambles of his school classroom. Photo by Imaginechina/AP Images.

China vs. Myanmar 

Everywhere, comparisons between the circumstances surrounding the recent disasters and Myanmar and China are cropping up.  One Brookings Institute article suggests that government disaster response actions are, by nature,  politically-driven: “Presently the apparent openness of news reporting on the Chinese earthquake stands in contrast to the staged scenes of disaster relief in Burma.” As media coverage directly impacts the receipt of donations, this is just one of many reasons why China seems to be having a better time salvaging aid than Myanmar.

Adding onto China’s base of prolific media coverage the interest/investment of American companies and global attention with the coming Olympic games, China is eclisping Myanmar in the push for relief.

 
MYANMAR - A boy plays in front of his home, destroyed by Cyclone Nargis. Photo by REUTERS/Stringer.

To DONATE:

Committee of 100 China Earthquake Relief Fund

American Red Cross Donations

AmeriCares Aid

An open, public hearing is being held by the US-China Economic and Security Review Commission* in Washington on May 20, 2008. The topic of the hearing is “China’s Proliferation Practices and the Development of its Cyber and Space Warfare Capabilities,” and seeks to collect and share information from academic, industry, and government expertise to identify and determine economic and security impacts occurring as a result of the US’ bilateral trade partnership with China.

This fifth hearing in a series of public hearings will cover the following activities taking place in China:

• proliferation activities
• growing cyber space activities and capabilities
• growing presence and capabilities in outer space

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* The Commission is mandated by Congress to investigate, assess, evaluate and report to Congress annually on “the national security implications and impact of the bilateral trade and economic relationship between the United States and the People’s Republic of China.'’