By ELIZABETH HAYES
Despite growing concerns of an ever-increasing trade imbalance with China, it’s not entirely a one-way street.
U.S. businesses are exporting to China in greater numbers than ever before, and the types of products most in demand from power plants to copper wires to medical equipment reflect the country’s burgeoning economic scene.
The value of exports going to China through the Los Angeles Customs District, for example, has grown from $650 million in 1988 to more than $3 billion in 1996.
The People’s Republic of China is Los Angeles’ second largest trading partner, accounting for $21.2 billion worth of imports and exports through the L.A. Customs District in 1996. That’s almost a seven-fold increase in as many years.
“They’re going to continue being one of our top trading partners for as far as I can see in the future,” said Al Fierstine, director of business development with the Port of Los Angeles.
Foreign investment into China amounted to $37.5 billion during 1995 the most recent data available 10 percent more than in 1994. The United States is about even with Taiwan and Japan as China’s second-largest foreign investor, following Hong Kong-Macao.
While skeptics question how much longer the spending can continue, China still plans to import about $100 billion of equipment and technology each year and invest $250 billion in infrastructure development between 1995 and 2000.
“Within the last year, it was known that 50 percent of all the building cranes in the world were leased or located in China for the building projects going on,” said Vance Baugham, trade manager for the L.A. Office of International Trade.
China’s priorities include highways, railways, harbors, airports, steel, energy, telecommunications, raw materials, agricultural projects, electronics, machine building, construction and some light manufacturing.
Among the major infrastructure investments being made by China are:
? Up to $50 billion on capital construction and technological renovation to improve transportation.
? About $65 billion on energy and power-generating projects, including oil, natural gas and coal development, eight nuclear plants, about 10 hydroelectric facilities and more than 30 thermal power-generating plants.
? About $3 billion to raise its computer industry’s output.
? Some $42 billion in communications.
China is also looking to raise its steel production to 100 million tons per year by the year 2000 and to 120 million tons per year by 2005. The government has approved construction of three new steel plants and three existing plants will be expanded.
“They need raw materials from the U.S.,” said Guy Fox, chairman of the Foreign Trade Association of Southern California.
The biggest exports to China from Los Angeles are: machinery, mostly for metal fabrication; aerospace components; food processing equipment; consumer goods and electronics; bulk plastic; toys and sports equipment; copper wires; fertilizer; vehicles; optical products and medical instruments; hides and skins for shoes and handbags; and chemical products.
Already, the scrap steel market has grown in concert with a construction boom, said Jorge Perazzo, senior consultant for the Export Small Business Development Center in El Segundo. The Chinese melt the steel in furnaces and reuse it for construction steel, he said.
Transportation is also an emerging area. The Department of Commerce estimates that China’s vehicle market will grow by 10 percent annually through the end of the decade. In 1993, the Chinese owned 1.2 million passenger vehicles 70 percent of which were imports. That number is expected to reach more than 3 million by the year 2000.
One of the major threats to China’s growth spurt is the country’s chronic shortage of energy. But that also creates opportunity. The Chinese are interested in acquiring advanced oil-recovery technology and specialized drilling equipment to maintain production in their aging fields. They also hope to form joint ventures to explore and develop geologically challenging areas, according to the Department of Commerce.
Beijing also wants to develop new fields offshore and in 11 southeastern provinces.
Baugham sees export potential in a growing Chinese middle class with an appetite for goods that represent the California lifestyle. He cites fashion, entertainment, household consumer goods, luxury items, cars and wine. Even if the middle class is a tiny percentage of the overall population, that could still mean millions of consumers, he said.
China is also importing more refrigerated cargo, such as chickens, Fierstine said.
Entertainment has potential, but has been held back so far by insufficient, albeit improving, enforcement and protection of intellectual property laws.
Baugham also sees environmental cleanup and prevention technology as a big growth area that will draw on engineering and product technology, testing and evaluation.
“It’s already started now, but it’s not in a big strong upward curve mode yet,” Baugham said.