US 'wrong' to blame China for own woes

08:11, June 18, 2010      

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The United States must learn more about China instead of criticizing the country for its exchange rate and trade policies if it wants to increase exports to the world's largest market, US economists have said.

The comments followed a new bout of China-bashing launched by US legislators at a US House of Representatives hearing on Wednesday.

US congressmen and industrial associations criticized China for its foreign exchange regime and trade-related policies, including indigenous innovation, government procurement, intellectual property rights (IPR), market access and the investment environment. They claimed that these disadvantaged US industries and caused job losses.

The hearing comes at a time when US unemployment rates remain high despite initial signs of economic recovery.

"The problem is, we are not good at exports and we don't pay enough attention," said Barry P. Bosworth, senior fellow of the economic studies program with the Brookings Institution.

"I don't think they understand that American workers lose jobs because of this."

The US itself, especially its industrial unions, should be blamed, Bosworth said.

The unions should have joined trade associations on pushing the government to develop strategies for expanding exports to China instead of complaining, he said.

"But they don't do anything ... they are not international."

The United Steelworkers, the largest industrial union in North America, has initiated a large number of trade remedy cases against imports from China since the global financial crisis, including the top two cases involving tire special guarantees and oil steel pipes.

The United Steelworkers provided a list of issues including currency policy, IPR and protectionism at the hearing. The union alleged that these will wreak havoc on American workers and urged the government to intervene.

The US should not point fingers but learn more from German firms, which have established a good reputation in China and exported a "huge" amount of products, Bosworth said.

"They were not multinational, but that is not true now," he said.

Domenico Lombardi, president of Oxford University's institute for economic policy, agreed.

"The US knows how China is important and attractive, but they don't really know Chinese consumers, how the Chinese system and households work and how Chinese government works," he said. "American firms should invest more in those things, not simply replicate (strategies for) the Western markets."

Lombardi also attributed the US complaints partly to the ongoing European sovereign debt crisis, which he said will worsen in the coming months.

US President Barack Obama had pledged to double trade by 2014 over 2009 and create more jobs in March, after which the European debt crisis broke out. Its impact on US exports could have gone beyond Obama's expectations and forced the US to shift its focus to the Chinese market and get tougher with it, analysts said.

The European debt crisis "is the biggest source, or trigger point, of the tensions between China and the US", as the US has to pin higher hopes on China and Asia as importers of American goods when the European economy is fragile, Lombardi said.

The European debt crisis will deteriorate and the tensions between China and US will also intensify, he said.

China is the third-largest export market for US goods, after Canada and Mexico. Last year, US exports to China were about the same as in 2008, but US exports to the rest of the world declined by almost 20 percent during the same period, figures from US authorities showed.

"It is difficult to meet President Obama's goal without a (sound) bilateral commercial relationship with China that plays an important role in the recovery and future growth of the US economy," said John Frisbie, president of the US-China Business Council.

Currency policy

Sander M. Levin, chairman of the Ways and Means Committee under the US House of Representatives, said at Wednesday's hearing that "Congress will take some action against China, if China does not change its currency practices after the G20 meeting and the administration does not respond promptly thereafter".

He said Congress believes China persists in pursuing discriminatory trade and investment policies that benefit it at the expense of other countries like the US.

After witnessing trade deficits in March, China's exports for May rose sharply by almost 50 percent. The rise renewed calls in the US for an appreciation of the yuan, although economists said that will not help US jobs or exports.

"I am worried that the US spends much time on arguing China's exchange rate ... when China appreciated its currency ... nothing happened (in helping reduce US trade deficit)," the Brookings Institution's Barry Bosworth said.

A number of Western politicians have also turned a deaf ear to China's reasoning over the yuan issue, said Lei Yanhua, researcher with the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce.

"They keep blaming China for political gain," Lei said.

No country can make the rules of the game independently and China will not accept such rules, he said.

"If they want to impose their rules unilaterally on China, it will incur substantial retaliation from the latter."

The G20 world leaders' summit in Toronto later this month is not a suitable venue for discussing the revaluation of the yuan, Foreign Ministry spokesman Qin Gang said on Thursday.

"Discussing the yuan's exchange rate at the G20 is not proper," Qin said.

Tan Yingzi in Washington and Wang Xiaotian in Beijing contributed to this story.

Source:China Daily


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