China stands firm against US market scramble By Antoaneta Bezlova
BEIJING - As the United States talks about rebalancing global growth, China
sees a covert agenda of trade protectionism. 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.
The recent high-profile meeting of the Group of 20 in Pittsburgh and this
week's 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 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 US President Barack Obama's calls on China to reduce its dependence on
exports by promoting more consumer spending have caused experts 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 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.
Chinese experts believe that Obama's eyes are set on making exports the new
economic engine for the faltering US 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, have been among the factors that drove the country's
economy to expand at an annualized rate of 14% in the second quarter of the
year. By contrast, the US economy shrank at an annual rate of 1% during that
period.
Beijing's policy of holding back the value of its currency provides its exports
with a competitive edge. China's liberal support for its exporters has led to
friction 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 tires and threatened action against imports of US poultry
and auto parts.
In signing the order subjecting Chinese tire imports to 35% duty on top of the
existing 4%, Obama sided with America's trade unions, which have complained
that a "surge" in imports of Chinese-made tires caused 7,000 job losses among
US 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 to deal with the worst economic and financial
crisis in decades.
The economic crisis has accelerated China's emergence as a center of power, and
in Pittsburgh the leading industrialized countries agreed that decisions on
global economic issues in the future would have to include important players
among emerging economies such as China and India.
Speaking from Istanbul, 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 predicted that the euro and
the Chinese yuan would join the US dollar as reserve currencies.
But while agreeing to share power with emerging economies, the Group of Seven
(G-7) leading industrialized nations, including the US, have continued to lobby
Chinese leaders to address skewed global flows in trade and investment by
letting the Chinese currency - also known as the renminbi - 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 G-7 said in a statement in Istanbul. The other G-7 members are Japan,
Germany, the United Kingdom, France, Italy and Canada.
China's official position 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 the new economic balance is really depends on who is speaking," said
markets analyst Sun Miaoling. "From the US's point of view, it means rapid
increase in both exports and savings. For Beijing, it means the lifting of
restrictions on US high-technology exports to China but also renewed vigilance
on the way trade protection clauses are being used."
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