China's trade with the United States more than doubled in the first half of this year as U.S. traders flocked to Peking to discuss a dizzying array of business schemes, and it is expected to increase even more.
"It's very hard now to get a room in Peking," said U.S. China trade specialist John Kamm. For example, a U.S. petroleum delegation on its way to China is scheduled to stay in the little-visited east coast port of Luta, in part to avoid the crush in the national capital.
According to U.S. analysts, American exports to China totalled $211.1 million in the first half of 1978; compared to $62 million in the same period last year - a 240 per cent increase. U.S. imports of Chinese goods increased about 47 per cent, from $113 million to $166.1 million.
The [WORDS ILLEGIBLE] in total trade appears to be conservative figure since it does not take into consideration about $100 million in American oil equipment recently sold to Peking. The oil rigs do not show up in U.S.-China trade statistics because they have have assembled in Singapore.
Some analysts expect Chinese trade worldwide to soar to $19 billion this year, 30 per cent above last year's estimated total. The Chinese, without giving monetary figures, say their exports grew 28.5 per cent and their imports 60 per cent in the first half of this year.
Businessmen and economists here and in the United States say American trade with China is likely to continue to accelerate as the Chinese begin to consider a number of financing and development plans that in the past would have offended their doctrine of socialist self-reliance. These plans include use of cheap Chinese labor to produce American-brand products under American direction. U.S. Chinese joint venture projects in Hong Kong, and American exploitation of Chinese natural resources.
Experts caution, however, that all, of these schemes, including the much-heralded plans for American drilling of Chinese offshore oil fields, have yet to be seriously negotiated. How much the Chinese will be willing to loosen their restrictions on foreign involvement in their economy, and how much business they will give the United States without full diplomatic relations, "will only emerge as the talks continue," one American trader said here shortly before returning to Peking.
Some analysts suggest that the Chinese my stall as long as two years before reaching decisions on foreign investment. Opening the door to foreign capital would go against China's self-reliance creed but give Peking rapid development with little investment of its own hard currency. Estimated current hard currency reserves of $4 to finance their own projects until at least 1980, some argue.
The Chinese will need the time to sort our myriad proposals on oil exploration that they have received from Japanese, European and American companies. They continue to send out contradictory signals on whether they will accept part foreign ownership of some new development ventures and whether they will begin to borrow money from foreign banks, rather than rely as they have in the past on delayed payments for equipment to ease cash flow problems.
"You can't overemphasize how early it is in this whole thing," said one foreign analyst here. "We've been floundering around trying to figure out what the Chinese are doing in the economy. I've finally figured out that we are floundering around because the Chinese are floundering around."
Much of the increase in U.S.-China trade this year can be attributed to a continuing crisis in Chinese agriculture. The Chinese have had three bad harvests in a row - last year's harvest was estimated at about 2 to 5 percent below 1976, itself a bad year.
As a result, China purchased 2.5 million metric tons of American wheat this year in its first entry into the U.S. grain market in four years. The purchases are worth about $280 million, spaced out over this year and next. Recent purchases of American cotton and soybean oil have also been reported.
Some analysts predict another bad harvest this year, and that would force more overseas grain purchases and perhaps reduce Peking's hard currency reserves to the point where get-rich schemes involving heavy foreign investment would look more attractive.
Since April and May, when Peking apparently made a key decision to experiment with new trade procedures, the Chinese have been talking with the Washington-based semi-official National Council for U.S.-China Trade and some private American traders. Kamm, who represents the National Council here, said some talks involve plans for wholesale conversion or construction of Chinese factories that would produce American-brand light industrial goods such as electronic equipment, design and, in some cases, raw materials would be supplied by a U.S. company and would be supervised by Americans living at the factory site in China. China would provide the cheap labor and land, retain full ownership of the factory and pay the U.S. company for its technology with goods from the plant.
Other talks have explored what, for the Chinese, is an even more daring proposition - allowing a foreign company to acquire part ownership of a Chinese industrial project. Such projects would be organized only on neutral territory such as Hong Kong or Macao. The Chinese partner in such ventures would not be the Chinese government itself, but one of the serveral Hong Kong companies which Peking owns.
Christopher Phillips, president of the National Council is scheduled to visit Peking in mid-September for wide-ranging talks on these and other plans that interest the Chinese.
The Chinese still seem leery of any proposal that challenges their sovereignty. One Chinese view going in debt to foreign banks, as nearly every other developing country does, as dangerous. They prefer halfway measures, such as accepting large foreign bank deposits in the Bank of China and using the money to buy foreign equipment.
Such squeamishness has come under attack lately in the official Chinese press, and some American businessmen think Peking will soon discard entirely its reticence to use Western methods.
Peking's Kwangming Daily recently cited with approval what it said was Lenin's theory that "the proletariat was inexperienced in business management and . . . it must learn humbly from the bourgeoisie and the organizers of trusts, otherwise it would not succeed in building socialism and its revolution would come to a stand-still."