With economic troubles in Southeast Asia and Japan and China's exports booming, administration officials meeting with finance ministers from around the world said Saturday that they feared the United States was headed toward a revival of huge trade deficits with Asia that could provoke a backlash in Congress.
Treasury Secretary Robert E. Rubin met with his Japanese counterpart, Hiroshi Mitsuzuka, in a session that one Japanese official described as "quiet but very tense." Rubin urged him to make sure that Japan did not attempt to crawl out of its recession by boosting exports to the United States.Yet Japanese executives concede that is already happening, and they say they have little choice now that their biggest market - Southeast Asia - is reeling from a summerlong currency crisis that is spreading to other nations.
"No one wants to admit it out loud," said one senior Japanese executive here for the annual meeting of the World Bank and the International Monetary Fund. "But now there is no place else that still has strong demand for Japanese goods except the U.S."
According to many estimates circulating here, Japan's surplus with the United States will exceed $65 billion this year, roughly a 20 percent increase from last year.
The sudden revival of trade deficits - an issue on which President Clinton focused intently for the first three years of his presidency, then scarcely mentioned - comes at a politically inopportune time for the White House. Clinton is battling in Congress for a renewal of his power to strike new trade accords around the world.
But he is running into strong opposition on both the Democratic left and the Republican right, much of it rooted in suspicions that American workers have gained far less from from the administration's embrace of global competition than Clinton contends.
Moreover, Clinton is about to welcome China's president, Jiang Zimen, to the United States for the first state visit of a Chinese leader since before the 1989 Tiananmen Square massacre. With little progress to boast about on the human rights front, Clinton's aides had hoped to emphasize the foreign policy benefits of an expanding trade relationship with China.
That will now be difficult. Most American estimates now suggest that China's trade deficit with the United States will exceed $50 billion for the first time this year, making it nearly the size of Japan's.
Moreover, efforts to speed along negotiations to get China into the World Trade Organization - which would require it to adopt rules that would further open the Chinese market - have bogged down.
Large trade deficits themselves are not necessarily bad news for the American economy. A steady stream of competitive imports helps keep inflation in check. America's soaring trade deficit numbers also reflect the fact that the United States has one of the healthiest economies in the world.