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POLITICS: China Resists U.S.’s ‘Covert' Trade Agenda
By Antoaneta Bezlova
BEIJING, Oct 7 (IPS) - As the United States talks about rebalancing global growth, China sees a covert agenda of
trade protectionism. And while Beijing seems to agree that there is a price to pay for its new
ascent as a global power, it bristles at suggestions that it needs to let its export powerhouse
fade from prominence by allowing its currency, the yuan, to appreciate faster.
Recent high-profile meetings of the Group of 20 in Pittsburgh and the weekend annual
gatherings of the World Bank and the International Monetary Fund (IMF) in Istanbul have
provided a stage for cross talking between the United States and China, illustrating how
far apart their agendas about helping shore up the world economy’s recovery remain.
True, the Pittsburgh summit in late September produced a pledge by both rich countries
and fast-growing powerhouses to rethink their economic policies, and reduce imbalances
between big exporting nations such as China and Japan and debt-laden countries like the
United States, which has long been the leading global consumer.
But U.S. President Barack Obama’s calls on China to reduce its dependence on exports by
promoting more consumer spending have caused experts here to see hidden agendas.
"Washington is talking about decoupling and rebalancing the global economy but the true
nature of these pursuits is the United States’s scramble for markets," Chen Fengying, an
expert on world economic issues with the China Institute of Contemporary International
Relations, a think tank that advises the government, told the ‘China Times’ weekly
publication.
Chinese experts believe that Obama’s eyes are set on making exports the new economic
engine for the faltering U.S. economy, and his pronouncements about addressing global
imbalances aim to arrest further expansion of China’s export powerhouse.
Broad government support for Chinese exporters, along with stimulus spending and
record bank lending, has been among the factors that drove the country’s economy to
expand at an annualised rate of 14 percent in the second quarter of the year. By contrast,
the U.S. economy shrank at an annual rate of 1 percent during that period.
Beijing has intervened heavily in currency markets to keep the value of its currency down,
thus providing its exports with a competitive edge in the current weakened economic
climate. China’s liberal support for its exporters has led to frictions with its trade partners,
particularly with the United States.
A full-blown trade row erupted between the two countries in September after Beijing
accused Washington of "rampant protectionism" for imposing heavy duties on imported
Chinese tyres and threatened action against imports of U.S. poultry and vehicles.
In signing the order subjecting Chinese tyre imports to 35 percent duty on top of the
existing 4 percent, Obama sided with America’s trade unions, which have complained that
a "surge" in imports of Chinese-made tyres had caused 7,000 job losses among U.S.
factory workers.
China’s minister of commerce Chen Deming told the media that Obama’s decision was
sending "the wrong signal to the world" at a time when Washington and Beijing should be
cooperating with each other to deal with the worst economic and financial crisis in
decades.
China has glowed in the global consensus that the economic crisis had accelerated its
emergence as an established centre of power. In Pittsburgh the group of rich
industrialised countries agreed that decisions on global economic issues in the future will
have to include important players among emerging economies like China and India.
Speaking from Istanbul where the World Bank and the IMF held their annual meetings over
the weekend, World Bank president Robert Zoellick said the crisis had brought the curtain
down on the unipolar world that followed the collapse of communism 20 years ago.
In the future, he said "there will certainly be a larger role for the emerging powers, there
will be multipolar sources of growth, there will be more south-south trade between
developing countries." He went on to predict that the euro and the Chinese yuan, formally
known as the renminbi, will join the U.S. dollar as reserve currencies.
But while agreeing to share power with emerging economies, the G7 policymakers – from
seven industrialised countries in the world, including the U.S. – have continued to lobby
Chinese leaders to address skewed global flows in trade and investment by letting the
yuan appreciate faster.
"We welcome China’s continued commitment to move to a more flexible exchange rate,
which should lead to continued appreciation of the renminbi in effective terms and help
promote more balanced growth in China and the world economy," the G7 said in a
statement in Istanbul.
China’s official position though has been that its currency policies cannot be blamed for
the lopsided trade flows and the world economy’s imbalances. Marking 60 years of
communist rule last week, Chinese premier Wen Jiabao told the nation and the world that
Beijing intended to contribute to a global recovery by maintaining the continuity and
stability of its policies.
"What is the new economic balance really depends on who is speaking," said markets
analyst Sun Miaoling. "From the U.S.’s point of view, it means rapid increase in both
exports and savings. For Beijing, it means the lifting of restrictions on U.S. high
technology exports to China but also renewed vigilance on the way trade protection
clauses are being used."
(END/2009)
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