China may face trade sanction from US: Morgan Stanley

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Last updated at: (Beijing Time) Wednesday, November 05, 2003

China may face trade sanction from US: Morgan Stanley

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The United States is likely to impose a sanction on China to protect its own trade, warned Morgan Stanley chief economist Stephen S. Roach at the ongoing Bo'ao Forum for Asia, saying currently things may not be that worse but the danger is looming up.

At a luncheon under the theme of "Economic Globalization and Industrial Division" held on November 2, Roach said that in mid September the Senate and House of Representatives jointly proposed a bill threatening a sharp increase of tariff on all goods exported to the United States if China is determined not to give up its fixed Renminbi exchange rate. Roach expressed his belief that the possibility of the bill being passed and made a law may not exceed one fifth, but the probability may rise along with the worsening political strives, especially with the continuous rising of unemployment rate in the United States.

Put forward by both parities the bill is well grounded in terms of ideology, geopolitics and industrial development stressed Roach. What's worse, the White House can do nothing to help if it did make efforts to ward off the rising trade protectionism trend in recent years, and a fact is, the Bush Administration lifted steel tariff by a large margin in 2002. All these fortified the political ground for striking China in the area of trade.

Due to the global depression, Roach said, the United States can no longer bear the burden of contributing a disproportional share to the world economy. Trade protectionism is returning worldwide and trade rows between countries are rising. Under such circumstances other countries must brace themselves up for an urgent restoration of global economic balance by launching huge-scale structural adjustments.

Roach also criticized severely Japan's doings that run against market economy, saying by now Japan had moved 125 billion US dollars to interfere with the foreign exchange market to prevent yen from devaluating. This means to pass the bucks on US dollars to other currencies, especially to the euro. Besides, Japan also in the past year took lead in attacking China, calling Renminbi revaluation and holding China responsible for global deflation. This is a serious mistake of Japan, said Roach, as well as a sign of its incompetence.

By PD Online staff member Li Heng

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