Top Biz News

Top minds in heated debate on RMB, trade

By Fu Jing (China Daily)
Updated: 2006-06-23 08:49

Lardy did accept that the trade imbalance was caused by China being the final point in the Asian supply chain, with a large proportion of exports to the US not actually produced by China.

For example, 60-70 per cent of the value of China's manufacturing products is imported first and then exported after assembly. While for electronic appliances, the ratio is as high as 90 per cent, he said.

But Lardy defended the US export licence system, saying: "It's very common to hear from Chinese officials that the export licence system is a cause of the bilateral trade imbalance, and I don't think this is a likely significant factor."

He quoted figures demonstrating that the US Government has approved, on average, 80 per cent of applications for technology exports to China, and the value of the products and technologies that have failed to earn government approval account for only a small portion of exports.

In 2005, he said, the value of unapproved technologies was about US$12 million, or 0.3 per cent of the bilateral trade.

But Lin insisted that Lardy underestimated the negative significance of US export regulations on China, which he saw as a trade barrier.

Despite the relatively small number of applications that were actually turned down, the system may have had a wider impact on potential export applicants, Lin pointed out.

"If the US treated China as equally as its partners Japan, South Korea and others, I think US exports to China would soar," said Lin.

His words follow a promise from US Undersecretary of Commerce for Industry and Security David H. McCormick in late May, that the US would "update" its export policies to China, and look for ways to reduce the administrative burden on civilian trade.

Yesterday's seminar was arranged by the China Development Research Foundation, an organization affiliated to the central government.

Lardy is in the country talking about the ideas in his latest book, "China: the Balance Sheet," recently published by the US-based Centre for Strategic and International Studies and Institute for International Economics.

He will continue his tour at the weekend when he takes part in a Sino-US economic forum in Tianjin.