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Foster: China Critical to U.S. Job Creation, Competitiveness

Ask U.S. executives for a list of their toughest markets, and China will be included. Ask them which market is growing the fastest and provides the greatest opportunity, and China would top that list as well.

Despite its challenges, China is vital to the global competitiveness of U.S. companies and their ability to create jobs for American workers.

China is America’s fastest-growing export destination. Its growing middle class is demanding more sophisticated goods and services, especially American-made electrical machinery, vehicles, agricultural products and industrial materials. In 2010, the U.S. exported $93 billion of goods and services to China, supporting or creating 500,000 jobs for American workers.

Still, the U.S. is losing ground in an increasingly crowded and competitive Chinese import market.

The American Chamber of Commerce in Shanghai’s report, “U.S. Export Competitiveness in China,” ranks the United States 12th in export performance in China among 20 countries and regions compared. Japan, South Korea and the European Union countries are America’s major competitors in China, and all hold a larger share of China’s import market.

Why is the United States lagging behind in China when American companies are world leaders in many industries? In many cases, our foreign competitors have an edge when it comes to exports because their governments have better-financed export promotion programs.

America is losing out on export deals in China because it is not being as aggressive. Simply stated, the U.S. government can help American companies compete more effectively by stepping up export promotion efforts.

The National Export Initiative, which has the goal of doubling U.S. exports by 2015 to create 2 million jobs, is a good start. But to build on the NEI, the United States needs to take several additional steps.

First, President Barack Obama should lead a trade mission to China to help attract new orders for American products. We applaud the president’s recent successes in India and Latin America and encourage him to make China his next stop.

Second, the U.S. Export-Import Bank should increase financing for China-bound exports. The bank’s loans in support of exports to China were a paltry $15.1 million last year, or less than one-tenth of 1 percent of all authorizations. The bank should dramatically increase its role in export financing in China to ensure that American exporters, especially small and medium-sized businesses, have access to the same financial backing as foreign competitors.

Third, the United States should enhance funding for federal export promotion programs. The U.S. Commercial Service is key to supporting the increasing number of U.S. companies interested in exporting to China.

U.S. Commercial Service spending historically provides among the best returns on investment in the U.S. government. In 2008, for every $1 spent on the agency’s export promotion services, it returned $420 in company-confirmed export successes. In 2010, the agency reported more than 1,000 confirmed export successes. Yet this proven resource for boosting exports is woefully underfunded. Today, there is a 35 percent vacancy rate of Commercial Service staff in China.

Finally, the federal government should leverage city and state export initiatives. States such as Pennsylvania and Washington are leading the way in providing China-focused export assistance to their home-state companies. Federal and state efforts should be harmonized with some extra federal funding.

American companies produce the best products, employ the best workers and drive world-class innovation. China is the perfect example of a fast-growing market that offers the kinds of export opportunities the United States must develop to achieve the goals of the NEI.

China’s potential is so great that capturing one additional percentage point of China’s market for imports would translate to $11.3 billion in additional exports, with the potential to support tens of thousands of American jobs.

The president is right to focus on trade as a way out of America’s economic slump, but what is needed most are U.S. policies that enhance the ability of American companies to compete in the Chinese market.

Brenda Lei Foster is president of the American Chamber of Commerce in Shanghai.

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