The changes to the China Export Control Policy would exempt US exporters in critical sectors such as semiconductor equipment and electronics from having to apply for licenses to export to companies in China. But the importing party would have to prove long-standing US ties and be willing to submit to closer scrutiny.
US Undersecretary of Commerce for Industry and Security David McCormick said high-tech exports to China reached more than US$12 billion last year. New licensing flexibility would open up "potentially hundreds of millions of dollars" in American sales to Chinese companies and also enhance security, he said.
The proposed rule changes follow a heavily criticised announcement in May that the US would expand restrictions on 46 new types of products in 10 categories. These included specialized chemicals, lasers, electronics and telecommunications – and most of them are only banned from export to countries on the US list of terrorist-sponsoring states, such as Iran.
McCormick said at the time the new restrictions would be "as targeted as possible" and only affect Chinese military purchases. But critics claimed the rules went too far, surpassing security requirements and hurting the interests of US businesses.
Chinese officials have long maintained the controls are a key cause of bilateral trade imbalances, and say it would buy more US technology if allowed to.
However, McCormick disputed the claims. Of the US$41 billion in US exports to China in 2005, only about US$2.4 billion involved licensed technology, and only US$12.5 million had been denied export permission, he said. "The numbers just don't, in any objective analysis, support any correlation between the trade deficit and our export control regime."
China found support from the American Chamber of Commerce in Beijing, which argued in its 2006 White Paper that although the dollar amount of rejected sales is low, this is because the "uncertainty surrounding the approval and licensing programs" meant members no longer approached US suppliers of high-tech goods. The restrictions drove Chinese importers into the open arms of rival suppliers from the EU and Japan, it said.
Surplus hits new high
China's May trade surplus surged 44% to a record US$13 billion on the back of a 25% year-on-year rise in exports, raising expectations the country would surpass 2005's record US$102 billion surplus. Exports reached US$347 billion for the first five months of the year, up 26% on the same period in 2005, while imports rose 22% to US$301 billion.
Wen on African energy hunt
Prime Minister Wen Jiabao inked 11 trade, business and cooperation agreements with Egypt on the 50th anniversary of diplomatic relations between the two countries. Wen was also set to visit Ghana, Congo Republic, South Africa, Angola, Uganda and Tanzania during an African tour focusing largely on energy supplies. In ceremonies at the office of Egyptian Prime Minister Ahmed Nazif, officials and businessmen from both countries signed deals to manufacture communications equipment, cooperate in the oil and gas sectors, simplify import procedures and rehabilitate a large Chinese-built conference center in Cairo.
US enlists China against EU
The US moved to win the support of India, Brazil, China and other fast-developing countries in its bid to push Europe into lowering farm import barriers. Ministers from the countries were meeting in Geneva in late June to negotiate a deal to free up trade in farm and industrial goods, two pillars of the WTO's Doha round of trade talks. US trade representative Susan Schwab indicated the main roadblock to progress in the talks didn't come from the likes of China, India or Brazil, but from Europe.
Progress in Sino-Australian talks
China moved closer to a free trade deal with Australia during a productive round of negotiations. Beijing chief's negotiator, Zhang Xiangchen, agreed to include key sectors in the talks ranging from agriculture to government procurement. Australian Trade Minister Mark Vaile had previously complained about China slowing negotiations and refusing to discuss key agricultural products.
Arab oil key to trade target
China reached an agreement with the 22 Arab League nations on plans for oil talks at the China-Arab Cooperation Forum in Beijing as part of a bid to double trade volumes to US$100 billion by 2010. The meeting emphasized the role of oil, natural gas and renewable energy deals in meeting the targets. China is believed to source 58% of its oil imports from the Middle East and, with domestic demand rising by about 15% a year, it is making diplomatic efforts in the region to secure further access.
Asian giants to grow together
Trade between India and China is expected to reach US$20 billion in the next couple of years, Defense Minister Pranab Mukherjee told a conference in Singapore. The Indian minister said there is enough space for both countries to develop and grow together, "not at the expense of the other." Trade between the two countries hit US$18 billion in 2005.
Baosteel flounders in price talks
After being given licenese to negotiate this year's benchmark price for iron ore, China was pushed aside by international steelmakers after failing to reach a deal with the mining companies. While Beijing's chosen negotiator Baosteel dawdled, steel producers from Germany, Japan and South Korea agreed to a 19% price hike in iron ore. China has said it won't accept such a rise.
Malaysia-US near FTA pact
The Federation of Malaysian Manufacturers said the free trade pact currently under discussion with the US would help manufacturers compete against lower-cost countries such as China. The two nations concluded the first round of talks on a Free Trade Agreement (FTA) last month, and US Asia-Pacific Assistant Trade Representative Barbara Weisel said she hoped to wrap things up by the end of the year.