Sino-US trade tensions escalate

08:40, September 17, 2010      

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The move came amid mounting US criticism of China's exchange rate policies, despite the central parity rate of the yuan rising to 6.7181 per US dollar.(Xinhua Photo)

Trade tensions between the United States and China have worsened in the wake of Washington filing two cases against Beijing at the World Trade Organization (WTO), claiming "unfair trade practices" against China.

The move came amid mounting US criticism of China's exchange rate policies, despite the central parity rate of the yuan rising to 6.7181 per US dollar, a fresh high, according to the China Foreign Exchange Trading System.

The US filings target anti-dumping duties that China imposed on electrical steel from the US, used in the power sector, as well as US suppliers having no access to electronic payment services in China.

"We are concerned that China is breaking its trade commitments to the United States and other WTO partners, both by favoring its one State-owned financial services firm to the exclusion of American credit and debit card companies and by manipulating trade-remedy investigations to unfairly restrict exports of American steel," US Trade Representative Ron Kirk said in a statement, according to Dow Jones.

China imposed countervailing and anti-dumping duties on electrical steel from the US in April as the Ministry of Commerce said export subsidies on American steel hurt China's domestic steel industry.

US credit card companies complained about a lack of access to China's fast-growing market. Visa informed its member financial institutions May to stop using UnionPay as an international payment method from August 1, which was not enforced, reports said.

Consultations are the first step in a WTO dispute. Parties that do not resolve matters through consultations within 60 days may request the establishment of a WTO dispute settlement panel, according to WTO rules.

Michael Pettis, a senior associate specializing in the Chinese economy for the Beijing-based Carnegie Asia Program, told the Global Times.

Thursday that "It is hopeless for the US to force China to raise the yuan, so in order to solve domestic problems, the Obama administration has to put more pressure on bilateral trade to decrease the trade deficit."

"Trade conflicts between the two countries will get more common by next year, as there are no feasible solutions to these conflicts," he said, adding that a trade war might be triggered if the situation worsens.

Wan Jun, a researcher of the global economy at the Chinese Academy of Social Sciences, told the Global Times that "The US is experienced in using trade dispute as a tool while putting pressure on China to win US public support."

The latest trade dispute came at a time when US lawmakers are holding hearings on legislation to encourage China to let its yuan rise in value. Chinese officials have repeatedly said a rising yuan "can't solve domestic US problems such as high unemployment."

Foreign ministry spokeswoman Jiang Yu said Thursday that "appreciation of the yuan won't resolve the US trade deficit with China or domestic US problems such as high unemployment."

By Guo Qiang, Global Times
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