China to feel US squeeze on trade. Textile quota to fall, but technology transfer may rise

China's persistence in asking for more access to United States' high technology paid off again last week. US Commerce Secretary Malcolm Baldrige told top Chinese officials that another policy review this year should loosen export licensing requirements. He also explained steps the US government has taken to make export licensing more efficient in order to improve the competitiveness of US companies in the China trade.

China has repeatedly requested greater access to US technology. Among other items, US officials have said China is seeking supercomputers, optic-fiber technology for communications, and advanced compounds used in equipment such as aircraft engines.

Some observers say that there is already more advanced technology available to China than it can absorb. There has also been some criticism that US policy of accomodating Chinese demands for high technology has been one of ``giving away'' important assets while receiving little in return.

During three days of meetings, Mr. Baldrige made it clear that China could not expect much change in its lucrative textile quotas in negotiations on a new textile agreement which begin next month.

Compared to previous years, this round of annual economic discussions took place in a quiet atmosphere. US complaints about China's hospitality to foreign investors have been more subdued since new regulations were announced late last year, though many businessmen have adopted a ``wait and see'' attitude about their implementation. Baldridge said that China's share of US foreign investment in East Asia was less than 1 percent and that both sides want to see this increased.

China has been pleased with last year's 65 percent increase in textile exports to the US. It had sales worth $2 billion, surpassing Taiwan as the largest supplier of textiles and clothing to the US market.

Total two-way trade between China and the US last year was $8.35 billion, a modest 3.3 percent increase over 1985.

It is their lucrative market share in textiles that now worries the Chinese. According to US officials, the subject of protectionism - particularly the new trade bill under discussion in the US Congress - came up frequently in group meetings.

``China is concerned about this issue,'' Premier Zhao Ziyang told Baldrige, according to the official New China News Agency. ``If the US Congress proposes a bill affecting China's commodity exports to the US, China's import payment ability will be affected, and this would not be favorable to US commodity exports to China.''

US exports to China fell last year by 19 percent, according to official US figures, leaving a trade deficit with China of $2.15 billion.

Baldrige offered the familiar Reagan administration commitment to free trade and said the President would veto any bill containing strong protectionist measures. But he said Chinese negotiators should lower their sights for the next textile agreement.

``We recognize that the textile trade is China's major foreign exchange earner and is therefore an extremely important issue to China,'' Baldrige said in a press conference last Friday. But last year's growth rate ``simply is not sustainable,'' he said, and new limits must be set at next month's meetings.

On the liberalization of US technology transfers to China, Baldrige noted there had been considerable progress since 1983. He promised Premier Zhao that by the end of this year the US would again extend the categories of technologies that can be exported without a license. He told the press that Chinese officials had not mentioned any specific type of technology they were interested in more than others.