With the Obama administration required to decide next month whether to label China a currency manipulator, the U.S. ambassador to China says the two sides face important negotiations on that and other key trade issues in the days ahead.
Speaking to students at Beijing's Tsinghua University, U.S. Ambassador John Huntsman said the United States and China both need to make adjustments to address trade tensions and problems in the bilateral relationship. He said some observers see U.S.-China relations as "a little bit out of balance, partially because of the currency issue."
To address problems, the United States should focus on "saving more and spending less, reforming our financial system, reducing our long-term deficit and exporting more," said Huntsman.
"On China's side, we hope to see more flexibility on the exchange rate, more domestic consumption, a stronger social safety network, a greater commitment to protecting intellectual property rights, and continued open access to Chinese markets," Huntsman said.
Chinese Premier Wen Jiabao has linked U.S. complaints to non-trade, non-economic issues in the relationship, blaming Sino-U.S. tensions on the Obama administration's decision to move forward with arms sales to Taiwan, and President Obama's recent meeting with the Tibetan spiritual leader the Dalai Lama. Wen made the comments in his annual news conference, but failed to note that both issues were ongoing before Obama took office.
In related news, a senior Chinese official has criticized growing calls in Congress for the Obama administration to slap retaliatory tariffs on Chinese imports for China's exchange rate "manipulation."
Speaking to reporters, He Yafei, China's ambassador to the United Nations in Geneva, denounced what he described as "unfair pressure" being put on China to revalue its currency, the renminbi.
He said U.S. exports to the Chinese market have remained stable despite claims China's currency is undervalued. He noted that U.S. exports to China fell by 0.22 percent last year at the same time U.S. exports globally slipped by 17 percent.
"I don't think the call by more than 100 congressmen is well-founded on facts," said He. "They should not blame the problems they have by finding a scapegoat in China."
He spoke two days after 130 House members submitted a joint letter to Commerce Secretary Gary Locke and Treasury Secretary Timothy Geithner urging the Obama administration to impose import duties on Chinese imports to counter the subsidy effect of China's fixed exchange rate policy.
The value of the renminbi has remained essentially unchanged at around 6.83 renminbi to the U.S. dollar since August 2008, despite China's far better economic and export performance vis-à-vis the United States and other major industrialized economies. Critics charge this undervaluation essentially subsidizes Chinese exports by keeping the price of Chinese goods artificially low in the United States and other markets.
