By and  on February 13, 2006

WASHINGTON — Citing a record $201.6 billion U.S. trade deficit with China last year, textile companies and lawmakers reiterated calls for the Bush administration to crack down on the country's currency and other trade practices that they deem unfair.

Apparel and textiles imports from China shot up 43.8 percent in 2005 to 16.8 billion square meter equivalents, valued at $22.4 billion, the Commerce Department reported.

"We can't ignore the problem and leave our manufacturers to fight with both hands tied behind their backs," Sen. Hillary Clinton (D., N.Y.) said in a statement. "We need a national manufacturing policy that makes a real commitment to driving down our trade deficit and preserving our domestic manufacturing capacity."

The overall trade deficit jumped almost 18 percent last year. The deficit hit its fourth consecutive record, $725.8 billion, increasing U.S. indebtedness and worrying some economists because China, Japan and other countries are some of the biggest purchasers of U.S. Treasury bonds that help finance the federal budget deficit.

"Trade deficits as large as we have them are lowering [gross domestic product] by 1 percentage point a year," said professor Peter Morici of the Robert H. Smith School of Business at the University of Maryland. "We're investing a lot less in [research and development] and we're losing technology-intensive industries ... which means we're becoming a poorer nation."

The overall deficit is "a big number and that gets your attention," said Barbara Franklin, Secretary of Commerce under the first President Bush. "On the other hand, I don't think we should overreact to it."

Franklin said the country's GDP, two-thirds of which comes from consumer spending, will continue to grow.

"That's why [the deficit] doesn't concern me," she said. "If our economy slows down, then I think this figure will also slow down. Let's look at this as not something to panic over, but as something to say, ‘OK, why don't we do some things to try to counter this?'"

That means opening foreign markets to U.S. exports and promoting those exports, stimulating innovation and helping other areas, such as Europe, grow faster so they can buy more U.S. products, she said."We ought to be creating new industries, new things to replace whatever's moving, so our workers still have work to do," Franklin said.

"China creates for itself an absolute advantage in terms of export," said American Manufacturing Trade Action Coalition executive director Auggie Tantillo. "They provide subsidies on everything from the raw material to the cost of the water ... and they have all types of macro benefits such as an undervalued currency and a banking system that provides loans to the industrial sector, many of which go unpaid."

China captured 25.1 percent of the apparel and textile import market and grew much faster than total imports from all countries, which was up just 8.3 percent, indicating the world's most populous nation continued to pick up business from other manufacturing countries.

The rise in its apparel and textile imports for the year accounted for a 98 percent increase in apparel to 5.9 billion SME, worth $15.1 billion, and a 25.2 percent advance in textiles to 10.9 billion SME, worth $7.3 billion.

The Bush administration signed a deal in November that reimposed quotas on 34 types of apparel and textiles from China, which lasts through the end of 2008 and should somewhat slow China's growth.

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