Exports issue not just pinned on yuan

• Source: Global Times
• [21:48 April 11 2010]
• Comments

These controls have a broad negative impact on US high-tech companies and thousands of US jobs. Many Chinese firms are cautious about investing in projects involving products on the US export control list.

Export controls against China should be relaxed or eliminated in line with global market realities.

The US is no longer the sole owner of many technologies. Many items in the export control list are being sold freely elsewhere in the world by non- US competitors.

The US can also seize new market opportunities by encouraging China to further open its economy through the ongoing Doha Round Negotiations at the WTO.

The potential agreements will assure farmers, manufacturers, and service providers of lower tariffs and more transparent rules in all WTO members, including China.

China has a large appetite for US exports in almost every area where the US has a competitive advantage, such as machinery, aerospace, new materials, biotechnology, agriculture, and services.

The yuan exchange rate may remain an issue. The argument for a 40 percent appreciation of Chinese yuan, however, overlooks the fact that the US trade deficit with China is essentially multilateral. Exported goods from China have input from multiple countries, including other Asian countries and US multinational corporations.

If the US does not import inexpensive, good quality consumer goods from China, these kinds of imports will likely be substituted with those from other low-cost countries such as Bangladesh or Sri Lanka.

The only difference is that those countries may not use this money to reinvest in the US market, as China does.

At this moment when recovery is slow and fragile, the world, more than ever, needs the US and China to stand side by side.

They can, and must, find mutually acceptable solutions, or else, the world economy will be in peril.

The author is program officer for strategic analysis and China at the International Center for Trade and Sustainable Development, Geneva, Switzerland. forum@ globaltimes.com.cn