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The key issue is US policies restricting trade with China (3)

16:01, June 23, 2010

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China is the largest importer in the world. China's economic success is essential for the US, European Union and all nations recovery. China's policymakers will do all they can, short of destabilizing China's economy which would damage the global recovery, to help China's trading partners in both the developed and developing worlds. Although China's economy has become the second largest China remains approximately the 100th poorest country with 1.5 billion people with a per capita income that is about 8 percent that of America's 302 million people. Chinese policymakers will strive to ensure that its economy remains manageable while resuming the implementation of incremental RMB valuation increases. China will seek to ensure that the RMB exchange rate changes enable its economic growth to continue rather than become uncontrollable, which would harm all nations.

After China joined the WTO the US dollar declined in value 40 percent from 2000 to 2008 and from 2005 to 2008 China gradually increased the US dollar exchange rate of the RMB by 21 percent. But America's trade deficit globally and with China steadily grew nonetheless. Now America's huge stimulus-spending plan increased the US debt and deficits and will further decrease the US dollar's value. Nonetheless, in 2008 as the crisis loomed, China increased its holdings of US dollars as the U.S.'s other trading partners reduced theirs. At the same time, China pegged the value of RMB to the US dollar to increase stability and exert a positive influence on the Chinese economic recovery. Currently China is providing stability as the largest holder of U.S. government debt and US dollar denominated reserves.

Instead of triggering a fundamental economic and trade confrontation over the exchange rate of the US dollar and RMB, American policymakers in both the Obama administration and the US Congress now seeking increased China-U.S. trade and economic cooperation need to protect the mutually beneficial interests of both countries. To increase exports to China, the U.S. will need to remove American policies that restrict trade with China and propose policies that are reciprocally beneficial for both nations, which China's policymakers and people can implement and sustain. Continuing to restrict China's exports to the US while seeking to increase the US's exports to China is in neither the US nor China's interests. That is the issue that President Obama's administration must prepare a meaningful solution for at the G20 meetings and beyond.

John Milligan-Whyte is called the "new Edgar Snow" and the "21st century Kissinger" and is the only non-Chinese to be elected the winner of the Social Responsibility Award from the China Business Leaders Summit. 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 that created the "New School of America-China Relations." They founded the America-China Partnership Foundation and Forum in 2008 and the Center for America-China Partnership in 2005, which was recognized in 2009 as "the first American think tank to combine and integrate American and Chinese perspectives providing a complete answer for America and China's success in the 21st century."
E-mail: [email protected]; [email protected]


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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/90001/98705/99725/7037180.pdf