TABLE A-9.-CHINA: CONTRACTS FOR WHOLE PLANT IMPORTS-Continued Sources: Central Intelligence Agency, Research Aid, "People's Republic of China: International Trade Handbook' Washington, D.C., October 1976, table 11, and CIA, National Foreign Assessment Center, "China: International Trade, 1976-77", Washington, D.C., November 1977, table 11. TABLE A-10.-CHINA: FOREIGN DEBT POSITION,1 1970-76 1 All data are estimates based on contract terms, delivery schedules, and trade statistics and are rounded to the nearest $5,000,000. 26- to 18-mo credits for grain, for Japanese fertilizer in 1970 and for Japanese steel in 1975. Estimated at 8 percent per annum 1970-74, 10 percent 1975-76. 45-yr credits for complete plant purchases. TABLE A-11.-CHINA: FINANCIAL BALANCE WITH NON-COMMUNIST COUNTRIES, 1970-76 1 Net total of estimated transport costs, overseas remittances, downpayments for plants, and foreign aid. From table A-10, principal and interest. From table A-10, includes short-term and medium-term supplier credits. Since 1975, trade has continued to be an active element in the Sino-American relationship. The absence of normalized relations, however, and the unresolved nature of the linked claims and assets issues, the continued tariff discrimination, and the inability of the PRC to utilize Export-Import Bank facilities should they wish to do so, have all hampered the fuller development of trade and commerce. Despite these constraints, trade will grow in 1978 and the increased exchange of trade delegations augurs well for further development of the commercial relationship as called for by the Shanghai communique. During his term in office, President Ford reconfirmed U.S. support of the Shanghai communique and normalization of relations. He traveled to Peking in December 1975. In February 1977, President Carter affirmed the new administration's support of the communique and the desirability of normalization. In pursuit of this objective, the President sent Secretary Vance to Peking in August 1977. In January 1975, passage of the Trade Act of 1974 brought into law a variety of requirements that had the potential for affecting the newly developing Sino-American trade by adding to the requirements the PRC would have to meet if full normalization of the commercial relationship were to occur. Extension of most favored nation (MFN) tariff treatment and availability of Export-Import Bank loans are controlled by the requirements of the act. At this time, it seems unlikely that the PRC would discuss these requirements, at least prior to negotiations over full normalization. Trade, which had peaked in 1973 and 1974, was down to more modest levels in 1976 and 1977. The United States ran balance-of-trade deficits with the PRC in both these years. A gradual and generally steady growth in levels of both Chinese exports and U.S. exports of nonagricultural commodities, however, points to a commercial relationship moving forward at a realistic pace. The resumption of agricultural sales in 1977 bodes well for further increases. Two-way trade in 1978 should reach $1 billion, up nearly 270 percent from 1977; the U.S. surplus should reach $300 to $400 million. At times the export by China of various commodities has held a potential for disrupting the U.S. market with a resulting U.S. imposition of quotas. Chinese textile exports in late 1975 reached levels that raised calls for quotas, but shipments dropped in 1976 and no actions were taken. In late 1977, the first test case of market disruption under the Trade Act of 1974 occurred when a petition alleged disruption caused by export of cotton work gloves to the United States. The International Trade Commission ruled against the petition in March 1978. Another development that has gained momentum since 1975, particularly since the arrest of the Gang of Four in late 1976, has been the technical seminar type of trade delegation. Both associations and individual firms were invited to Peking in increasing numbers during 1977. For the Chinese, the seminar provides information on the latest technology while the Americans view the seminar as a selling technique. The number of these visits appears to be increasing as the PRC moves toward more purchases of Western plant and technology to support their drive for the modernization of industry. In the use of the seminar and in other ways more U.S. firms are introducing their products to China and laying the foundation for a continuing and mutually beneficial exchange of trade. While a sober appraisal of progress to date shows that trade has been less spectacular and more difficult than expected, it is also recognized that more U.S. businessmen are traveling to China each year and more Chinese delegations are arriving here as the process of expanding commerce in accord with the Shanghai communique continues. B. COMMERCIAL RELATIONS: CONTINUED Relations Resumed President Nixon's trip to China in February 1972 was the culmination of an American initiative begun in 1969 to reopen a relationship interrupted in 1950 by the Korean hostilities. Step-by-step American moves selectively removing passport restrictions, removing certain 27-427-78- -49 |