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Protectionism cuts U.S. or China

10:46, May 11, 2011

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By Li Hong

In global relations, we have observed political partnership often builds on economic intertwinement. After two entities are meticulously interwoven by all industrial lines, the odds for miscalculation and enmity would greatly decrease.

Although the United States and China, the world's two major powers, are now more closely linked economically than 20 or 10 years ago, Washington still has quantitative qualms about endorsing and implementing full-fledged cooperation and integration with China.

A good number of Chinese watchers have made bare: the U.S. government has till today kept its high-technology export controls on China; and, it remains, stubbornly, guarded against Chinese investments in varied U.S. assets. The stringent profiling and screening of Chinese investments in America have been deemed unfair and harmful for employment and economic growth.

From China's CNOOC's failed bid to acquire California-based Unocal five years ago to Huawei Technologies' attempts to invest in 3Com and 3Leaf and other telecommunications corporations, China has seen Washington's arcane hand to deny investments from across the Pacific, under the cover of protecting America's national security.

Also, the United States has imposed restrictions on more than 2,000 high-tech goods to be exported to China, with mandatory requirements to clarify end-user and end-use in China, before American manufacturers can make shipments.

Out of frustration and agony, some in China have voiced displeasure, claiming there are "structural conflicts of interests" between the two countries, which they believe will not go away in foreseeable future. Some even say that Americans do not have good will to see an Asian country outgrow them in prosperity and strength.

Even as U.S. President Barack Obama and Secretary of State Hillary Clinton have promised to increase cooperation with China, there remains lots of work to be done to build mutual trust and work to avoid misunderstanding and miscalculation.

At the just-concluded Third Sino-US Strategic and Economic Dialogue in Washington, it is proper and sensible for Ms Clinton to clarify on the obstacles in bilateral relations. She said: "Some in the U.S. still see China's growth as a threat, while some in China worry America seeks to constrain China."

To allay the concerns, it is important for both sides to remove some restrictions and show good will. For the Obama administration, it will win millions of supporters if it chooses to eliminate the caps on more-than-2,000 goods of high-tech category, and allow them to be exported to China. The deed will also help overcome a steep trade imbalance between the two.

For China, it will be nice for the top foreign currency policy-makers to quicken the pace of the yuan's liberalization reform and allow an accelerated yuan appreciation vis-à-vis the dollar. The move will inspire more exports of American-made goods to China, and, also help China control inflation by lowering export prices.

Some people's worries that U.S., by demanding a faster yuan appreciation, intends to weaken China's international competitiveness in export prowess can be dispelled. The fact is that China's foreign trade volume is destined to reach $3 trillion this year – the world's largest -- and maintains a favorable surplus of more than $100 billion, despite the yuan has gained 26 percent against the U.S. dollar, since July 2005.

Building on the good wills, the two governments could expand and enhance their cooperation in intellectual rights protection, government procurement and wider market access and deeper industrial integration. The two countries will have a big stake to gain as their economies still largely complement each other.

It is just short-sighted to negate a historical trend of global economic cooperation and integration, because any protectionist moves, out of stereotype, fear, or political consideration, will hardly protect America's or China's economic dynamics in market competition.

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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About this column

Li Hong has been a reporter and column writer, mainly on China's economy and politics.

He was graduated from Beijing Foreign Studies University, and once studied in University of Hawaii and the Poynter Institute in Florida.


Dai MinJohn
Dai Min

John Milligan-Whyte and Dai Min, 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 American-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."

Li HongmeiLi Hongmei

Li Hongmei, editor and columnist of PD Online.