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The key issue is US policies restricting trade with China

15:59, June 23, 2010

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By John Milligan-Whyte and Dai Min

The United States is the world's leading "currency manipulator." However, Chinese policymakers have not publicly threatened to declare that the US is because they recognize that such conflict between the world's two largest economies during the global financial and economic crises would harm all nations. The US dollar has been the currency used in international trade since the Bretton Woods Agreement in 1944 in which the U.S. government, which then held an estimated 60 percent of the world's gold reserves, promised it would exchange on demand an ounce of gold for every thirty-five US dollar notes it printed. In 1972, as the U.S. opened diplomatic relations with China, President Nixon also announced the US was officially abandoning that promise to peg the value of the US dollar to the market value of gold. By then, the US had already printed, according to a leading Chinese expert, 5800 percent more US dollars than the gold the US held. Chinese policymakers know that successive America administrations' manipulation of the value of its currency and monopoly on printing US dollars enabled American policymakers to unilaterally create decades of huge trade and investment advantages and economic growth for the U.S., which has led the world in managing the value of its currency at the expense of other nations.

Prior to the recent second round of the Strategic and Economic Dialogues, President Obama indicated in a strongly worded statement that America needs to make a decision on labeling China a "currency manipulator" and that his administration was going to get tougher in demanding that China promptly increase the exchange rate of the RMB to the US dollar in an attempt to help America recover and increase American exports. Such a statement by President Obama is not what has come to be expected by China and was deemed entirely unacceptable. An American president publicly threatening a serious currency exchange rate confrontation with China is an example of why it is an illusion to think that disputes seeking to harm China's core economic and national security interests can be compartmentalized from reducing China's policymakers scope for collaboration in supporting America's core economic and national security interests.


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The articles in this column represent the author's views only. They do not represent opinions of People's Daily or People's Daily Online.

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John 
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Whyte
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Dai MinJohn
Milligan-
Whyte
and
Dai Min

John Milligan-Whyte and Dai Min are the executive producers and co-hosts of the Collaboration of Civilizations television series adapted by the eight books they wrote in the America-China Partnership Book Series published in English and Mandarin in 2009-2010. They founded the America-China Partnership Foundation and Forum in 2008 and the Center for America-China Partnership in 2005. E-mail: [email protected]

http://english.people.com.cn/90001/98705/99725/7037167.pdf