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Trade fears after US currency comment
Source: Xinhua |
January 24, 2009, Saturday
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Print Edition
Print Edition
A CLAIM that China is involved in currency manipulation has sparked fears of increasing trade protectionism by the United States, Chinese economists said yesterday.
"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency," US Treasury Secretary-designate Timothy Geithner wrote to the Senate Finance Committee in recently released documents.
"This is the first comment made by the Obama administration on Sino-US economic ties," said Cao Honghui, a researcher with the Institute of Finance under the Chinese Academy of Social Sciences.
It was undoubtedly a signal of more friction on trade and currency issues between the two nations, Cao said.
Geithner also said that Obama had pledged as president "to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices."
The United States has long held that China is purposely keeping its currency devalued against the dollar to help exports, which it claimed has injured the interests of US enterprises.
However, the Bush administration did not officially label China as a "currency manipulator" in its currency policy reports.
"The Obama administration is worrying about China's reducing holdings of US treasury bonds while maintaining a trade surplus with the US," Cao said.
According to China customs statistics, Sino-US trade hit US$333.74 billion last year, up 10.5 percent year-on-year. China's trade surplus with the US increased 4.6 percent in 2008 from a year earlier to US$170.85 billion. The growth, however, was 8.6 percentage points lower than 2007.
Geithner's comment was just a "cliche" aiming to try out the Chinese government's response, said Zuo Xiaolei, senior analyst with Beijing-based Galaxy Securities.
The move had been expected, Zuo said, as "the new Obama administration is facing serious job losses and economic recession while the Democrats have tended to favor trade protectionism."
US unemployment hit a 16-year high of 7.2 percent in December, according to US government statistics.
The US federal budget deficit totaled US$485.2 billion in the first three months of the current fiscal year, the highest on record for a first quarter and larger than the record for a full fiscal year of US$455 billion set last year, said the US Treasury Department.
It would hurt the concerted action of fighting the global financial crisis if the US labeled China as a "currency manipulator", said Yi Xianrong, a researcher with the financial research center of the CASS.
It would also hamper the global efforts to shake off an economic slowdown as the Sino-US economic tie had become one of the world's most important bilateral economic ties, Yi said.
With a 9-percent rate, China contributed more than 20 percent of global economic growth in 2008, he said.
"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency," US Treasury Secretary-designate Timothy Geithner wrote to the Senate Finance Committee in recently released documents.
"This is the first comment made by the Obama administration on Sino-US economic ties," said Cao Honghui, a researcher with the Institute of Finance under the Chinese Academy of Social Sciences.
It was undoubtedly a signal of more friction on trade and currency issues between the two nations, Cao said.
Geithner also said that Obama had pledged as president "to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices."
The United States has long held that China is purposely keeping its currency devalued against the dollar to help exports, which it claimed has injured the interests of US enterprises.
However, the Bush administration did not officially label China as a "currency manipulator" in its currency policy reports.
"The Obama administration is worrying about China's reducing holdings of US treasury bonds while maintaining a trade surplus with the US," Cao said.
According to China customs statistics, Sino-US trade hit US$333.74 billion last year, up 10.5 percent year-on-year. China's trade surplus with the US increased 4.6 percent in 2008 from a year earlier to US$170.85 billion. The growth, however, was 8.6 percentage points lower than 2007.
Geithner's comment was just a "cliche" aiming to try out the Chinese government's response, said Zuo Xiaolei, senior analyst with Beijing-based Galaxy Securities.
The move had been expected, Zuo said, as "the new Obama administration is facing serious job losses and economic recession while the Democrats have tended to favor trade protectionism."
US unemployment hit a 16-year high of 7.2 percent in December, according to US government statistics.
The US federal budget deficit totaled US$485.2 billion in the first three months of the current fiscal year, the highest on record for a first quarter and larger than the record for a full fiscal year of US$455 billion set last year, said the US Treasury Department.
It would hurt the concerted action of fighting the global financial crisis if the US labeled China as a "currency manipulator", said Yi Xianrong, a researcher with the financial research center of the CASS.
It would also hamper the global efforts to shake off an economic slowdown as the Sino-US economic tie had become one of the world's most important bilateral economic ties, Yi said.
With a 9-percent rate, China contributed more than 20 percent of global economic growth in 2008, he said.
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