China Perspective
US may tread softly on key currency issue
By Chen Weihua, Michael Martin and Fu Jing (China Daily)
Updated: 2010-03-25 07:57
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NEW YORK - The US may not risk labeling China as a currency manipulator any time soon as any such move may lead to all-round trade wars between Washington and Beijing, experts on both sides of the exchange rate divide have indicated.
"There has been some speculation that the administration might wait until after the Strategic and Economic Dialogue (scheduled for May) to make a statement on manipulation," said Evan A. Feigenbaum, senior fellow for East, Central and South Asia at the Council on Foreign Relations, in an interview with China Daily.
"But that can be made any time down the road," and not necessarily right after the talks, Feigenbaum, a former US foreign affairs official, said.
"A lot of businesses are concerned about this issue; and the issue (certainly) won't disappear from the Sino-US relations agenda," Feigenbaum said. "I presume that China would find a way to retaliate," if the US made any such move, Feigenbaum said.
"I'm not sure how, but I'm presuming China would do so. That would negatively affect US-China trade," he said. Last week, more than 100 US lawmakers asked to define China as a currency manipulator, which they said intentionally undervalued the yuan for trade benefit.
When asked why the US may decide to back off, Bush said the US' goal was not to punish China. The idea was not to engage in rhetorical blame games, he said. "The goal is to secure a rebalancing of the Chinese domestic economy and relationship with the rest of economic system," Bush said. He said a more effective way of doing that might be by not blaming China, but engaging with it more vigorously. "The question is, what are the best means to achieve what ends the US wants," Bush said.
Chinese scholars too said the US would not risk labeling the nation as a currency manipulator as Washington would find itself in a weak position economically in the post-crisis recovery period.
Bi Jiyao, a senior economist affiliated to the National Development and Reform Commission, the nation's top planner, said the US was just using the currency issue to pressure China. "The issue is not mainly about trade and currency, but about the political implications," Bi said.
Bi said the currency issue was part of a US pressure campaign to boycott China after the US president's meeting with the Dalai Lama and approval for weapons sales to Taiwan.
The Obama administration would weigh its decisions carefully before taking tough action against China, Bi said. "If they fully consider the impact of taking such action, they will not risk doing so."
He said labeling China as a currency manipulator and slapping more tariffs on Chinese exports to the US would escalate trade wars between the two countries. "I think both countries are unwilling to see that happen."
Zhang Xiaojing, a senior economist with the Chinese Academy of Social Sciences, also said that dialogue between the two countries was the only solution to solving thorny bilateral issues.
"What's more, the US is not in a proper position to ask China to let its currency appreciate," Zhang said. "Instead, what it needs to do urgently in rebalancing trade with China is to increase US exports."
Fu Jing reports from Beijing.
