China-US Trade in Deep Water; Repercussions for EU?
BEIJING, China – It’s quite likely that the China-US trade ties enter an eventful period during Bush’s second term instead of a ‘honeymoon’ as expected by some people, said Zhou Shijian, a renowned Chinese expert on international economic and trade issues. On February 3 two US senators made a proposal, urging the Bush Administration to […]
BEIJING, China – It’s quite likely that the China-US trade ties enter an eventful period during Bush’s second term instead of a ‘honeymoon’ as expected by some people, said Zhou Shijian, a renowned Chinese expert on international economic and trade issues.
On February 3 two US senators made a proposal, urging the Bush Administration to pressure Beijing for RMB revaluation in six months, otherwise to levy a 27.5 % special tariff on Chinese commodities exported to the United States. The issue of RMB (China Yuan Renminbi) revaluation has been stirred up again after having subsided two or three months ago. On the same day, the US-China Economic and Security Review Commission held a hearing to collect opinions from some American officials and entrepreneurs on questions including RMB exchange rate, US-China trade deficit and IPR protection.
In the coming four years, Zhou pointed out, China-US economic and trade exchanges will keep momentum, but with a visibly higher number of confrontations and frictions, of which the RMB rates will be the most obvious. It goes without saying that the same confrontations and frictions will happen in Europe which is already the case with the interim-review on anti dumping duties for China made bicycles which is now pending inside the European Commission and was asked for by the European Bicycle Manufacturers’ Association.
“Exchange rate policy is economic sovereignty of a state, which can never be altered at other countries’ will,” Zhou stressed. “If you let RMB to float like the US dollar or Japanese yen now, it will be no less than driving the “bicycle” of RMB onto an “expressway” filled by “motor cars” of the dollar and the yen, and possibly see the “bicycle” killed. For the United States, RMB revaluation will not help to reduce trade deficit towards China, on the contrary, it will directly hit American companies in China,” said Zhou.
China could gradually allow its currency to float in a wider band and pegged with the dollar, the euro and the yen together instead of with only the dollar. If the United States imposes quotas simply on its one-sided judgments, China may well appeal to the WTO for a fair resolution, Zhou suggested. On the other hand, Chinese enterprises should shift their growth pattern from focusing on “quantities” to on “quality”. Source: People’s Daily Online