Greenspan once again warns of US protectionism

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Last updated at: (Beijing Time) Friday, December 12, 2003

Greenspan once again warns of US protectionism

US Federal Reserve Chairman Alan Greenspan on Thursday warned of the danger of protectionism, the second time since he made a similar speech late last month.

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US Federal Reserve Chairman Alan Greenspan on Thursday warned of the danger of protectionism, the second time since he made a similar speech late last month.

"For the most part, we as a nation have not engaged in significant and widespread protectionism for more than five decades," said Greenspan in remarks prepared for the World Affairs Council of Greater Dallas.

"The consequences of moving in that direction in today's far more globalized financial world could be unexpectedly destabilizing," Greenspan added.

"We can shut out part or all foreign competition, but we would pay a price for doing so -- perhaps a rather large price," he said.

Greenspan also refuted the claim that the Chinese currency rate issue has led to the job losses in the United States, saying that revaluing the Chinese currency would do little to protect US jobs.

It is "far more likely that our imports from other low-wage countries would replace" Chinese imports, Greenspan elaborated.

Greenspan also pointed out that "a rise in the value of the renminbi would be unlikely to have much, if any, effect on aggregate employment in the United States, but a misaligned Chinese currency, if that is indeed the case, could have adverse effects on the global financial market and, hence, indirectly on US jobs."

Greenspan made a similar warning late last month when he said that "it is imperative that creeping protectionism be thwarted and reversed."

As the trade deficit is increasingly becoming a concern in the United States, there has been a much-heated debate about trade-related issues in the country.

Greenspan has not specifically mentioned the US trade policy in his recent two speeches, but he has offered enlightening viewpoints to the very confusing debate over the issues.

In other words, Greenspan has challenged the "conventional wisdom" surrounding the trade issues, as local media reports said.

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