Letters to the Editor

To the Editor:

Your newspaper, among others, has expressed the viewpoint that trade with China would not be feasible since there is little, aside from luxury imports, that we would buy from her. What, could China possibly sell us to pay for the capital goods she needs?

I believe that the answer to the dilemma lies in the capital account. If the political climate allows it, both the United States and China could profit from an investment of U.S. capital in China.

If U.S. capital is to be invested overseas, it should be directed away from capital‐rich Western Europe toward the relatively capital‐poor countries such as China or Russia. These countries have a sufficiently disciplined and educated labor force to make good use of an influx of American capital and technology.

Our massive international payments problem dictates this change in direction in our capital outflows. The present disequilibrium arises in part from our investing in areas where we are not earning enough on the current ac count to offset the investment. By investing we are sending purchasing power to areas that already are acquiring dollars by selling us a surplus of manufactured goods.

In fact, Japan is correct in keeping out American capital, since she surely needs no influx of dollar purchasing power. China and Russia could use the dollars from our finance capital to purchase capital goods and heavy equipment and technology so necessary, for their modernization.

The plus to our balance of payments would appear in our current aocotuit due to the increased exports of capital goods. These exports, in turn, would stimulate business in the United States where there is a 25 per cent underutilization of capacity and insufficient demand.. Increased exports would not be as inflationary, to the U.S. as they would be to Western Europe and Japan, which are running closer to full capacity and employment.

RICHARD A. LEVY Schenectady, N.Y., Feb. 20, 1972