It is too early to celebrate the news that the U.S. Congress
could postpone action on legislation to pressure China into raising
the value of yuan, for it seems the Senate Finance Committee still
plans to address the issue in October and the rising sentiment of
protectionism within Congress continues to cloud prospects for
healthy Sino-US trade relations and the global economy.?
Bush administration officials have warned the legislation could
violate World Trade Organization rules and trigger a wave of
protectionism around the world.
"Trade protectionism is a double-edged sword. The prosperity of
any country is rooted in open economy and free trade, not economic
nationalism," says Shang Yanwen, a senior researcher with China's
Ministry of Commerce (MOC).
A cursory glance at statistics shows that since 1980 the U.S.
has filed more than 120 anti-dumping investigations into Chinese
exports, which means, worldwide, one out of every six such
investigations targeting China was initiated by the U.S.
For decades, China's thriving economy has been a huge aspect of
daily life in many parts of the world, most visibly through the
"Made-in-China" label on everything from clothes to
automobiles.
According to a survey by Morgan Stanley, since 1997 American
consumers have saved 100 billion U.S. dollars each year through
buying cheap Chinese products, which has helped the country
maintain a moderate level of inflation.
Imports of Chinese products have accelerated the shift of
employees from the manufacturing sector to service industries. More
than 57 million people in the U.S. are working in jobs related to
international trade. People who work with multinational companies
earn 20 percent more than those working elsewhere, surveys have
shown.
Even the U.S. government acknowledged in its 2007 Economic
Report of the President that free trade each year brings back 750
billion U.S. dollars to the country.
A recent petition signed by 1,028 economists to members of the
U.S. Congress to persuade them to abandon the protection measures
may help refresh memories of the congressmen who objected to, but
failed to prevent, the Hawley-Smoot Tariff Act that was passed 77
years ago. The Act is widely believed to have contributed to the
Great Depression that followed.
Playing up product safety issues
In July, China's State Food and Drug Administration admitted
that it was difficult to be "optimistic" about the country's food
safety situation and admitted the foundations of its supervision
system were "weak".
The country had suffered a series of embarrassments regarding
product safety but the government has now begun to tighten
regulations.
It has announced that all major food products produced from
September 1 to be exported overseas must carry labels to show they
have passed inspections.
Product recall regulations announced last week also require
manufacturers to cease production and sales, notify vendors and
customers and report to authorities when product defects are found,
with fines of up to 50,000 yuan (6,600 U.S. dollars) for failure to
do so.
Chinese authorities have also punished relevant companies that
were proved to have violated laws and regulations in production and
export.
However, there is still vehement criticism coming out of the
U.S., much of which appears to be aimed at playing up food safety
problems which in turn has caused some importers to shy away from
Chinese products.
Experts have said domestic politics lie behind the proposed
legislation. But even to satisfy its own needs, the U.S. may have
to take another look at the situation. If the U.S. loses the
Chinese market, which has ascended to fourth position of all its
export destinations, the American people will feel the effects.
China has bought 628 airplanes made by Boeing Co. and will have
3,140 planes from this company by 2025. The country consumed 9.88
million tons of soybeans and 1.71 million tons of cotton imported
from the U.S. last year.
U.S. distributors pocketed 60 to 80 billion dollars of net
profits through selling imported Chinese products last year. Trade
between China and the U.S. contributed about one trillion dollars
to the market value of the American stock exchanges.
U.S. companies chalked up a sales volume of 80 billion U.S.
dollars with investment in China last year. According to a report
by Oxford Economics, by 2010, Sino-U.S. trade will have helped
raise the GDP growth rate of the U.S. by 0.7 percent, lower its
price level by 0.8 percent and increase its disposable income per
household by 1,000 dollars.
Meanwhile, China has become the world's manufacturing base which
supplies global consumers with inexpensive goods and the country's
own consumer market is enjoying the fastest growth on the
planet.
Both countries should be aware that if the first and third
largest traders in the world cannot find a way to get on, people
all over the world will be affected.
(Xinhua News Agency September 6, 2007)
