China Warns Against Trade Sanctions

Beijing Lashes Out Against Congressional Pressure To Make Currency Reforms

(AP)  Chinese officials warned American lawmakers on Tuesday against threatening sanctions over trade disputes ahead of talks this month and said there are no plans to speed up currency reforms despite U.S. pressure.

Threats of sanctions if Beijing fails to ease exchange rate controls more quickly could disrupt financial markets and slow those reforms, the officials said. They briefed reporters about the May 23-24 meeting in Washington on condition they not be identified by name.

"What we need to explain is that external voices will only backfire.... Such external voices will only disrupt the normal reform of China's exchange rate regime," said a senior Finance Ministry official.

"We are firmly against any threatening rhetoric or steps to politicize economic issues, because that will only harm the economic interests of both sides," the official said.

The meeting next week, led by U.S. Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi, is the second installment of a "strategic economic dialogue" meant to address U.S. complaints about China's swollen trade surplus, currency controls and other issues.

The Chinese officials gave no indication of plans for initiatives that might mollify congressional critics who are pushing President George W. Bush to take action against Beijing.

Pressure on Paulson has increased since the Democrats took control of Congress this year. He is trying to defuse mounting anger among critics who blame low-cost Chinese imports and a $232.5 billion U.S. trade deficit with China last year for the loss of American manufacturing jobs and say Beijing will take action only if it faces sanctions.

China ended a decade-old direct link between its currency, the yuan, and the dollar in July 2005. The yuan was revalued by 2.1 percent at that time and has been allowed to rise by 5.3 percent against the dollar since then in tightly controlled trading.

American lawmakers who say Beijing keeps the yuan undervalued, giving an unfair advantage to Chinese exporters, are threatening to impose punitive tariffs on imports of Chinese goods unless Beijing lets the currency's value rise more rapidly. Economists say a change in the exchange rate by itself is unlikely to close the trade gap.

China says it is carrying out currency reform and other changes sought by Washington because they are in its own interest. But officials say they cannot move faster due to China's poverty and lack of development — a point to which Wu devoted a lengthy presentation at the dialogue's first meeting in December.

Paulson responded to congressional pressure by vowing in February that he would make faster action on currency the benchmark by which he judged Beijing. He has warned that the dialogue must produce results during the process in order to preserve U.S. support for free trade.

According to the Chinese officials, the agenda for next week's meeting includes opening China's service industries to more foreign investment and competition, energy and the environment, balanced economic development and innovation.

The final area is likely to touch on U.S. complaints that China is failing to stamp out its thriving trade in unlicensed copying of music, movies and other goods despite repeated promises.

China is sending as many as 16 minister-level officials, including its commerce and finance ministers and the central bank governor, to next week's dialogue, the officials said.

They appealed to the U.S. side to keep in mind the mutual benefits of the fast-growing trade and investment ties, and they stressed growing cooperation in areas such as North Korean nuclear talks and reform of the United Nations.

"Chinese-U.S. relations have brought real benefits to people on both sides," said a senior Commerce Ministry official.

The officials stressed that despite U.S. urging to make its exchange rate more flexible, Beijing believes that it cannot do so without possibly damaging its economy.

"The financial system of China is still vulnerable to a certain extent, so we should push ahead with financial reforms in a cautious manner," the Finance Ministry official said.

Chinese officials also complained about the difficulty of dealing with a U.S. political system where members of Congress make matters such as the closing of a local factory a matter of national policy.

"Members of the U.S. Congress need to weigh both issues of regional interest and long-term, overarching concerns," said the Commerce Ministry official.

[hypnotoad72]

One other note: For those of you who think America is leeching off of foreign countries, read this MSN article (sorry CBS):

http://articles.moneycentral.msn.com/Investing/SuperModels/TheSuperRichAreDoingYouAFavor.aspx

"The Super Rich Are Doing You A Favor"

The article mentions over 500,000 MILLIONAIRES thanks to our influence and input. China itself has said it has pulled 400 million people out of poverty. Given their population and where they came from economically, 400 million in 30 years is not bad by any measure. Even if people are arguing over the quality of what they make. After all, free market or communism, neither generates blind loyalty on the part of the laborers.

[hypnotoad72]

bm6005 - Amen, brother!

Don't forget, only Nixon could go to China.

[hypnotoad72]

Spectrum108 - I've said that for some time; Americans would readily take lower paying jobs...

...But also compare the COST OF LIVING. That's why India and China are booming and America is dying. Cost of living. Everything's cheaper for people in those countries. In America, nobody could begin to live on the wages being offered.

In short, there's a lot of people who need to get real. And it's more than just America's working class.

[middleman8]

The U S has been a parasite off other countries for the last 100 years. Quit your whinning and bring all your troops back and honnor your own borders. Your propaganda bubble has burst, face the truth.

[hypnotoad72]

middleman8 - Not all of us in the US are parasites. Some of us have no choice because those with the clout and/or position (blame Nixon, Reagan, Clinton, and a Bush or two) kept giving China and other countries things to do.

Don't forget, those countries' leaders (and people) don't seem to mind what's going on. So is the US really leaching? I'd say NO. I'm sure there's a line being crossed somewhere, but define the line first. And make sure all parties agree that line is fairly placed. Good luck.

[hypnotoad72]

middleman8 - Not all of us in the US are parasites. Some of us have no choice because those with the clout and/or position (blame Nixon, Reagan, Clinton, and a Bush or two) kept giving China and other countries things to do.

Don't forget, those countries' leaders (and people) don't seem to mind what's going on. So is the US really leaching? I'd say NO. I'm sure there's a line being crossed somewhere, but define the line first. And make sure all parties agree that line is fairly placed. Good luck.

[hypnotoad72]

Given the quality of many products imported from China, one has to wonder if Nixon's little journey some 35 years ago did any good in the end.

Each country has its own problems; the individuals can only do so much within their sphere of influence. Those with more power therefore have more responsibility toward their people; you can't get any more basic than that.

Until we become a one-world empire; but corporations don't like regulating anything. Except their own salaries, which doesn't seem entirely moral. Rewarding a good job is just due. But cheating and hurting others' livelihoods (or pensions) isn't a job.

BTW: What's left being made in America? Can we withstand a Chinese withdrawl? This is where we get the proof if they are our friends or not.

And didn't we recently try to open up relations with former enemy, Vietnam? So either our folks are treating with the enemy or we're anything but enemies. I'd love to know which is the truth so I can stop worrying.

[middleman8]

The U S has been a parasite off other countries for the last 100 years. Quit your whinning and bring all your troops back and honnor your own borders. Your propaganda bubble has burst, face the truth.

[olebd]

I've said it before.....we ALL will be working at a Wal-Mart someday because there will be nothing left elsewhere. We will make the minimum Wal-Mart wages and will only be able to afford the Wal-Mart products of which 99% of them are manufactured in China. Consumerism has and will continue to make us subservient to China. And the wheel goes round and round.

[bm6005]

Having been raised in the midwest and having worked in basic industry (Foundries, Automaking) I try my best to buy American and it's *** near impossible! Many products now are exclusively made in China. There is no choice anymore. We need to reverse this before we become absolutely impotent! Now don't bother giving me some yuppy lecture on free trade because it doesn't exist except for the outsourced suppliers. We need to level the playing field. If China doesn't straighten out we can go without their crappy goods!! Don't dismiss this as the rantings of a disaffected factory worker as I am a graduate engineer with 43 years of work experience. The people of this country has been sold down the drain by Lawyers and MBA's and I experienced it first hand!! Close all law schools and MBA programs for 50 years and let them die off!

[jjp735i]

Bush needs to take a peek in his shorts and find a pair..........China warns.....if the tag states made in China.....leave it on the shelf!

[jjp735i]

Bush needs to take a peek in his shorts and find a pair..........China warns.....if the tag states made in China.....leave it on the shelf!

[jjp735i]

Bush needs to take a peek in his shorts and find a pair..........China warns.....if the tag states made in China.....leave it on the shelf!

[jjp735i]

Bush needs to take a peek in his shorts and find a pair..........China warns.....if the tag states made in China.....leave it on the shelf!

[preacherbob1]

China "warns" us? Do we really need China's trade? Screw China!

[preacherbob1]

China "warns" us? Do we really need China's trade? Screw China!

[crater7]

Its time the Bush Administration gets a back bone.
China has tanted our food supply, killed our pets, and flooded our country with cheap, contimated products.
This administration inspects only than 2% of the imported food from China.
This administration has cut FDA inspectors by 15%.
But of course, China is a strong military country, not some third world country like Iraq, Afghanistan, and Iran. China is a threat to us not only military, but economically also. Dont look for any changes from the Bush administration. Bush will continue to send our jobs overseas. Business as usual.

[tomtomasters]

People are people no matter where you are in the world. Frankly; China out numbers America by more than a billion people. When push comes to shove, it is pretty clear where and who is the winner in all this. China has to have low prices because of the size of the population. Americans have no concept to the reality, yet they speak of equal rights. No matter how you look at it...what goes up must come down. It is never what goes down must come up. So America with your ignorant War in Iraq and your debt...don't be looking for any relief now or in the future. You need to get off the greed gravy train and start living like normal people by working for the preservation of the world. And that does not mean higher and higher rates. Get Down On It!

[tomtomasters]

People are people no matter where you are in the world. Frankly; China out numbers America by more than a billion people. When push comes to shove, it is pretty clear where and who is the winner in all this. China has to have low prices because of the size of the population. Americans have no concept to the reality, yet they speak of equal rights. No matter how you look at it...what goes up must come down. It is never what goes down must come up. So America with your ignorant War in Iraq and your debt...don't be looking for any relief now or in the future. You need to get off the greed gravy train and start living like normal people by working for the preservation of the world. And that does not mean higher and higher rates. Get Down On It!

[afmca]

China has known for decades we are the paper tiger - all roar; no bite. Sanctions should have been placed on Chinese imports decades ago; but big business wanted to protect profits over American jobs and security. The Chinese have never protected our copyrights and illegal copying of software, music, and movies is rampant. They utilize what is essentially slave labor to undercut competition and the US government has done nothing. Now they send over tainted food products and, even now, the sanctions are meaningless. The Chinese know American politicians will yell and shout for a few sound bites on the news, but eventually the need for WalMart to stock those shelfs with cheap imports will win.