China Resists US's 'Covert' Trade Agenda

BEIJING — 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 Pittsburg 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 Pittsburg 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 US 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' 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' daily.

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, has been among the factors that drove the country's economy to expand at an annualized 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 US 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 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 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 Pittsburg, the group of rich industrialized 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 industrialized countries in the world, including the US—have continued to lobby Chinese leaders to address skewed global flows in trade and investment by letting the yuan appreciate faster.