CIA: US-China Economic Relations Confidential, Intelligence Appraisal, February 24

US-China Economic Relations Confidential, Intelligence Appraisal, February 24, 1984, 5 pp. Released through The Black Vault, a digital archive of declassified government documents. This confidential intelligence appraisal from the Central Intelligence Agency, dated February 1984, provides insight into the economic relations between the United States and China during that time. Approved For Release 2009/02/18 : CIA-RDP04T00367R000201 240001-4 Central Intelligence Agency DIRECTORATE OF INTELLIGENCE Washington, D.C. 20808 February 1984 US-China Economic Relations Summary Commodity trade issues dominated US-China economic relations over the past year. The fallout from the textile issue depressed Sino-US trade, largely the result of reduced Chinese imports of US goods. Two-way trade dropped 15 percent to $4.4 billion. Beijing pointed to US trade restrictions as the reason for cutbacks, although market forces contributed heavily. In spite of discord over trade, negotiations progressed on several agreements that could enhance the Sino-US commercial relationship. Trade probably will revive and US investment in China is likely to expand in the wake of looser export controls and the conclusion of the industrial and technological cooperation accord. Textile trade will continue to be an irritant since Beijing relies on textile exports as a major source of earnings. China has joined the Multifiber Arrangement of GATT, but it is not likely to seek full GATT membership in the near future. Trade in 1983 In 1983, the United States incurred an annual trade deficit with China for the first time since 1977. US exports to China dropped 25 percent compared with 1982 levels; imports slipped nearly 2 percent. The deficit reached $300 million through October but fell to $70 million by year-end. The decline in US exports to China was particularly sharp in wheat, textile fibers, and plastics. Frictions Over Commodity Trade As in the past, Beijing pressed hard for higher levels of US imports to balance bilateral trade. In 1983, however, China met increasingly strong resistance to rapid growth in imports. Because Beijing's exports cover only a narrow range of products, attempts to increase sales have provoked antidumping complaints and other actions designed to limit China's activities in US markets. China's economic reforms have stimulated some of the trade friction with the United States. Decentralization of trade responsibilities and emphasis on profitability have thrust factories and local trade organizations into international trade activities with which they are often unfamiliar. The consequent underpricing of some Chinese goods in world markets has resulted in US antidumping investigations and restrictions on several commodities, such as chloropicrin, potassium permanganate, and gasoline. Beijing has given limited, grudging cooperation to US antidumping investigators but still faults Washington for restraining free trade. China is concerned that it is being unfairly singled out, that broadening US restrictions will be imitated in other markets, and that widespread constraints on textile sales will dampen export earnings and undermine a key source of financing for China's economic modernization. This memorandum was produced by the China Division of the Office of East Asian Analysis in response to a Treasury Department request. Prospects for trade in 1984 are better because of the improved political climate and the US economic recovery. Even with continued good harvests and improved internal distribution, grain sales could see moderate gains. They could rise significantly in the event of a poor harvest or a Beijing decision to accelerate improvement in the Chinese diet. Sales of pesticides and fertilizers, especially phosphates, will probably continue strong to support agricultural development. This is what the public record looks like at its most ordinary. Storyflo.com. US-China Economic Relations Confidential, Intelligence Appraisal, February 24, 1984, 5 pp. https://archive.org/download/us-china-intel-CI02241/CI02241_djvu.txt