Extension of China’s Trade Status Is Good News for California : Economy: State is on the front lines of commerce with that country in enterprises worth hundreds of millions of dollars.
California companies, selling everything from $10 Fred Flintstone dolls to $100-million jetliners, avoided a major setback Thursday as President Clinton renewed preferential trade status for China.
“It’s very good news,” said Robert Solomon, chairman of Dakin Inc., a Woodland Hills-based marketer of the Flintstone dolls and other toys, half of which are made in China. “I only see the potential there becoming greater.”
Mark Schlansky, manager of commercial aircraft at Douglas Aircraft Co. in Long Beach, said, “Now business can get down to doing business and making long-range plans and commitments” in China.
The President extended “most favored nation” trading status to China while severing the link between China’s trade benefits and human rights issues. His action removed the threat that China--had it been denied the trade privileges--would retaliate by imposing punitive tariffs and other costs on U.S. companies that sell to China or import Chinese-made goods.
California firms--notably those involved in aerospace, agriculture, computers, electronics, apparel and chemicals--are on the front lines of trade with China, which has a population of 1.1 billion.
A trade war would have been a major blow to the state’s fledgling economic recovery, some executives said. Companies still willing to import goods from China would have been forced to pass along the higher tariffs to U.S. consumers, they said.
Chinese retaliation would also have jeopardized at least $1.7 billion worth of California exports to China, representing 35,000 jobs, according to the Business Coalition for U.S.-China Trade, a group of about 400 California firms that urged Clinton to maintain China’s trade status.
Clinton’s decision “certainly will improve the commercial environment (in China) for California firms,” said Richard Brecher, a director of the U.S.-China Business Council, a trade group in Washington.
The action won’t immediately translate into more jobs for Californians, but “as California businesses become more involved and understand the Chinese market, it’s going to make a tremendous difference in terms of jobs here,” said Winston Elton, a trade specialist in San Diego with the accounting firm KPMG Peat Marwick.
Nearly 1,000 American companies overall urged Clinton to renew China’s MFN status, which enables China to export goods to the United States at reduced tariffs. China sold $30 billion worth of goods to the United States last year, while U.S. exports to China totaled $8.8 billion.
Aerospace firms, in particular, leaned on the President not to revoke China’s trade benefits, saying in a letter to Clinton that such a move would be devastating to their already beleaguered industry.
The nation’s largest exporter, Seattle-based Boeing Co., which relies on dozens of California-based suppliers to provide parts for its airliners, was a major proponent of maintaining China’s MFN status.
Clinton’s decision came on the same day Boeing confirmed that it is talking with “a number of airlines in China,” including Air China, about potential major sales of new aircraft. “Certainly the decision on MFN removes a major barrier,” Boeing spokesman David Jensen said. But he said it would be premature to speculate on any orders.
Lawrence W. Clarkson, Boeing’s vice president for planning and international development, hailed Clinton’s decision, noting that China “is Boeing’s fastest-growing market today” and that China already buys one of every seven jets built by the company. Boeing’s big Southern California subcontractors include Northrop Grumman Corp. in Los Angeles.
China is also important to Douglas Aircraft, the jetliner unit of St. Louis-based McDonnell Douglas Corp. Among other things, Douglas this year will begin exporting kits for the assembly of 40 passenger jets in Shanghai as part of a co-production program with Chinese companies.
“The China market is extremely critical for Southern California (because) the commercial aircraft market has been in a deep downturn,” said Douglas’ Schlansky.
Douglas and Boeing estimate China will need between $40 billion and $65 billion worth of new airplanes over the next two decades.
Clinton’s move was also hailed by Hughes Aircraft Co. in Los Angeles, which Wednesday announced a joint venture with Chinese companies to invest $100 million to $150 million over the next few years to manufacture and sell satellite receiving stations.
“We see China as a valuable market, particularly in the telecommunications realm,” Hughes spokesman Richard Dore said, adding that the company expects China to spend about $1 billion on communications satellite systems alone over the next decade.
Times staff writer Jube Shiver Jr. in Washington contributed to this report.
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