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asserted by the other two commentators. If it were to
become clear that its American project is not working,
he told Mr Zakaria, China has a Plan B: to focus on
boosting its own consumption through government
spending and easing credit to its people.
“The big question today,” Mr Ferguson said, “is whether
Chimerica stays together or comes apart because of this
crisis. If it stays together, you can see a path out of the
woods. If it splits up, say goodbye to globalisation.”
China’s trade numbers are worrisome,
but some small businesses in the US
intend to adapt
Expectations of a possible helping hand from China were
further dashed by export statistics published 11
th
December
by the Chinese government. It was reported that exports fell
2.2% from November 2007 to November 2008 – the largest
year-over-year monthly decline since April 1999 and a clear
sign that China has big troubles of its own.
Exports to all of China’s trading partners suffered, with
those to the United States down 6.1% in November. For a
startling comparison, Chinese exports to the US were up
12.4% as recently as October.
In the weeks leading up to the exports report, the Chinese
government allowed the yuan to fall against the US dollar
after a long period of appreciation. This suggests a move
by Beijing to strengthen China’s exporters by making their
goods cheaper and more competitive abroad.
This – together with China’s growing trade imbalance –
could signal greater US-China tensions ahead. But, at levels
below the national, commerce is looking to find its own way.
While the volume of trade between small businesses in
China and in Southern California has diminished, American
companies expect trade through ports in Los Angeles and
Long Beach to continue, and even pick up, during the
economic downturn.
James Flanigan of the New York Times cited an example
of this optimism: Composite Technology Corp (Irvine,
California), which makes carbon fibre cables for electric
power transmission. Last year through November it had sold
more than $12 million in cable to its Chinese distributor, the
Jiang-su Far East Group.
Now, Composite is expanding its manufacturing operation
in Irvine in expectation of doing even more business with
China. To promote such trans-Pacific ties, the investment
bank Roth Capital Partners (Newport Beach, California)
arranges financing for small companies in China.
In the week in which Mr Flanigan wrote, Roth was bringing
executives from 70 Chinese companies to meet with
American investment managers at a conference in Las Vegas.
(“An Eye on Growth, Deals Stretch Across the Pacific,”
20
th
November)
Dorothy Fabian
Features Editor