Vice commerce minister talks trade and currency with US

13:02, March 24, 2010      

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China's Vice Commerce Minister Zhong Shan will parlay with U.S. officials about expansion of bilateral trade, cooperation and the development of Sino-U.S. economic ties on his visit to the United States from March 24 to 26.

Zhong will hold talks with the U.S. Commerce Department, Office of the United States Trade Representative, International Trade Commission, State Department and Treasury Department, according to China's Ministry of Commerce (MOFCOM). He will also meet some U.S. legislators.

During Zhong's visit, the two sides will also have negotiations on trade imbalance, trade frictions, as well as other related issues.

Yuan rate

"We are willing to engage with the United States on currency issues," Zhong said in a recent interview. But he also stressed that adding pressure on China was not in line with "the way to get along in the Chinese culture."

Regarding Zhong's words, Mei Xinyu, a researcher with a think-tank under the MOFCOM, predicted that China would not compromise its principles, but might make concessions in order to gain further advantages.

"China's economy is in its expanding phase, and this suggests the long-term existence of trade frictions between China and the US." Mei noted that in the long run, China's trade volume will keep increasing.

China will not sit back if there are any sanctions, should the United States label China as a currency manipulator, Minister of Commerce Chen Deming said at the ongoing China Development Forum 2010.

Premier Wen's message

China's banking and foreign exchange regulators have recently opposed the politicization of yuan exchange rate issue. Premier Wen Jiabao said at a recent press conference that China opposes accusations and even forceful measures that press for yuan appreciation, which will not benefit the exchange rate reform.

Wen said Monday that an upcoming high-level political and economic dialogue offers an opportunity for China and the United States to solve problems regarding trade and currency.

The second round of the China-United States Strategic and Economic Dialogue, slated for May in Beijing, "will be a chance for China and the United States to settle disputes and problems." Wen said.

"Trade and currency wars won't help us cope with difficulties, but rather block cooperation," Wen told some 60 delegates at the two-day China Development Forum 2010 in Beijing.

"China was not pursuing a trade surplus. To keep a balance of international payments is the goal we are working toward. Those who thought trade protectionism would help their economy recover will find those measures counter-productive," Wen added.

Wen's remarks come as the United States is pressing China to appreciate the yuan and limiting Chinese products from entering its market by raising trade barriers.

US should face the "reality"

Barry Bosworth, a senior fellow in economic studies at The Brookings Institution, recently pointed out that a stronger yuan won't have significant impact on the U.S. trade rebalance. He noted that prices of products exported from China are decided by raw material and labor cost rather than yuan exchange rate.

Bosworth said that the United States exports mainly hi-tech products with high added value, and its direct competitors are Japan and Germany, not China.

Dan Newman, an economist in Seattle, and Frank Newman, former deputy secretary of the US Treasury, said in an article on the Web site of Foreign Policy that increasing the value of the yuan does not increase U.S. exports by making them cheaper abroad. "All that does is increase costs for American consumers."

British newspaper the Sunday Telegraph says Western nations should find solutions to their problems internally regarding the financial crisis, instead of blaming developing nations, such as China.

The article says "the Western world's response to this self-made 'credit-crunch' has highlighted the hypocrisy of our so-called leaders, their refusal to face reality."

By People's Daily Online
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