Trade with China: An Opportunity, Not Something to Fear

For years now, there has been hand-wringing about trade with China.  Critics argue that China manipulates its currency, treats its workers terribly, and sells us toxic products, among other things.  Proposed responses involve a wide range of barriers to Chinese imports.

But let’s take that last one, dangerous Chinese products.  It turns out that this provides a good opportunity to sell products to China.  The New York Times reports:

A number of recent high-profile scandals involving tainted food products in China have shaken public confidence in the safety of domestic supplies. …

Concerns about the safety of domestic supplies have led to a sharp rise in demand for imported [baby] formula among urban middle-class households, sending prices of foreign brands soaring in Chinese supermarkets. According to the United States Department of Agriculture, the retail price of a 28-ounce package of imported formula is 290 to 350 renminbi, or $46 to $56 — about 50 percent higher than most domestic brands.

Hoping to stem the loss of market share to foreign competitors — and perhaps to reap the higher margins on foreign milk — some Chinese producers are investing in plants overseas. One of China’s leading makers of baby formula, Synutra International, announced plans in September to invest about $130 million in a new milk-drying plant in the western French region of Brittany that will be operated by Sodiaal, a French dairy cooperative.

It’s clear that the Chinese market offers a great opportunity for U.S. exports.  Chinese consumer tastes are becoming more like Western consumer tastes.  If Western producers are smart, they will take advantage of this.  And if they do, we might hear a bit less about China as an economic competitor, and more about how positive mutual trade relations benefit all of us.