The Upside of U.S. Trade With China

Surging imports from China have produced record U.S. trade deficits with that nation, grabbing headlines and fanning protectionist flames here.

But often overlooked in the trade tussle is another fact: U.S. exports to China also are booming.

Spurred by China's sizzling domestic growth and market-opening measures triggered by the country's 2001 entry to the World Trade Organization, U.S. exports to China more than doubled between 2000 and 2004. China has become America's fifth-largest export market, behind Canada, Mexico, Japan and Britain.

"You can't ignore China today if you're a company that has any kind of global footprint," said Kurt Kuehn, a senior executive with United Parcel Service Inc., which tripled its service to China this year.

China's appetite for American products and services runs the gamut -- notably in raw materials, technology, transportation and banking -- with California companies enjoying a significant share of the action. Topping the export list last year were power generation equipment, electrical machinery, soybeans and medical equipment.

A huge part of that growth came from China's export- oriented factories, nearly half of which are owned by American and other foreign companies. China bought one-third of U.S. cotton last year, much of it grown in California, to produce the material that was shipped back to the States in clothing and fabric.

Semiconductors produced by Silicon Valley companies were sent to China, where they were installed in Dell Inc. computers and Motorola Inc. cellphones bound for U.S. customers.

California companies such as Ryan Security Technologies Ltd. have benefited from China's preference for American-made technology goods.

For the last three years, the distributor of U.S. medical and security equipment has enjoyed sales growth of 30% to 35% to Chinese government agencies and private companies.

"There's still an overwhelming perception that imports are better than local, at least in the quality of technology," said founder Eric Ryan, who commutes between his company's Santa Barbara headquarters and offices in China.

Airports, train stations and ports, prompted by the 2001 terrorist attacks, are buying X-ray machines sold by Ryan to screen for weapons and explosives. The growth in high-profile events -- such as last year's meeting of the Asia Pacific Economic Cooperation forum in Shanghai and the 2008 Summer Olympics in Beijing -- has generated demand for the company's surveillance products.