Friday, March 30, 2007
US WARNS CHINA ON STALLED LIBERALISATION
By Mure Dickie in Beijing
Friday, March 30, 2007, FT
A senior US trade official yesterday warned China that it might pay a political price if it continued to resist opening its markets wider to foreign sales and investment.
Frank Lavin, US undersecretary for international trade, said that while Beijing had largely honoured the market access commitments it made under the terms of its 2001 entry to the World Trade Organisation, liberalisation had stalled in the last two years.
China's huge and growing trade surplus meant there could be a “political price” to pay for further failure to respond to US calls for market liberalisation, Mr Lavin said. His remarks underscore US frustration at the failure of efforts to persuade China to make new concessions on issues including easier access to sectors such as finance and telecoms.
Concern about the surplus has also fuelled allegations from members of the US Congress that China is giving its exporters an edge by artificially holding down the value of the renminbi, with two senators this week pushing for a bill to force Beijing to allow it to rise.
The US Commerce Department could also this week announce preliminary countervailing duties against Chinese imports of glossy paper in a case brought by a US paper mill – a move that could open the way for further such actions.
Beijing has fuelled foreign concerns about a possible “backlash” against international investment by essentially blocking an attempt by Carlyle, the US buy-out group, to acquire an 85 per cent stake in China's biggest construction machinery maker. Carlyle recently announced it would instead buy just 45 per cent of Xugong Construction Machinery. However, Mr Lavin said allowing foreign takeovers of leading companies would be in China's own industrial interest.
“I think China needs 100 Carlyle Groups to come in and buy 100 Xugongs,” he said.
US senators Charles Schumer and Lindsey Graham this week said they expected Congress to pass, by the two-thirds majority needed to prevent a presidential veto, a bill that would force the administration to act against alleged currency manipulation.
The two senators, who last year dropped a proposed bill that would have imposed a 27.5 per cent tariff on Chinese imports, gave few details of how their newly proposed legislation might work.
China's foreign ministry said US critics should seek to resolve currency differences with “mutual respect” and “stronger communication” rather than “pressure and threats”. The ministry restated China's claim that the renminbi's exchange rate was essentially decided by market forces, although analysts say its float against a basket of currencies appears to be closely managed by the central bank.
“Should China's renminbi reflect changes in market supply and demand or should it listen to or reflect the orders of a few people in some other country?” Qin Gang, foreign ministry spokesman, asked a press conference.
“It is unreasonable and unfair to blame all the US's own economic problems on China,” Mr Qin said. ¶ 10:49 AM
Friday, March 30, 2007, FT
A senior US trade official yesterday warned China that it might pay a political price if it continued to resist opening its markets wider to foreign sales and investment.
Frank Lavin, US undersecretary for international trade, said that while Beijing had largely honoured the market access commitments it made under the terms of its 2001 entry to the World Trade Organisation, liberalisation had stalled in the last two years.
China's huge and growing trade surplus meant there could be a “political price” to pay for further failure to respond to US calls for market liberalisation, Mr Lavin said. His remarks underscore US frustration at the failure of efforts to persuade China to make new concessions on issues including easier access to sectors such as finance and telecoms.
Concern about the surplus has also fuelled allegations from members of the US Congress that China is giving its exporters an edge by artificially holding down the value of the renminbi, with two senators this week pushing for a bill to force Beijing to allow it to rise.
The US Commerce Department could also this week announce preliminary countervailing duties against Chinese imports of glossy paper in a case brought by a US paper mill – a move that could open the way for further such actions.
Beijing has fuelled foreign concerns about a possible “backlash” against international investment by essentially blocking an attempt by Carlyle, the US buy-out group, to acquire an 85 per cent stake in China's biggest construction machinery maker. Carlyle recently announced it would instead buy just 45 per cent of Xugong Construction Machinery. However, Mr Lavin said allowing foreign takeovers of leading companies would be in China's own industrial interest.
“I think China needs 100 Carlyle Groups to come in and buy 100 Xugongs,” he said.
US senators Charles Schumer and Lindsey Graham this week said they expected Congress to pass, by the two-thirds majority needed to prevent a presidential veto, a bill that would force the administration to act against alleged currency manipulation.
The two senators, who last year dropped a proposed bill that would have imposed a 27.5 per cent tariff on Chinese imports, gave few details of how their newly proposed legislation might work.
China's foreign ministry said US critics should seek to resolve currency differences with “mutual respect” and “stronger communication” rather than “pressure and threats”. The ministry restated China's claim that the renminbi's exchange rate was essentially decided by market forces, although analysts say its float against a basket of currencies appears to be closely managed by the central bank.
“Should China's renminbi reflect changes in market supply and demand or should it listen to or reflect the orders of a few people in some other country?” Qin Gang, foreign ministry spokesman, asked a press conference.
“It is unreasonable and unfair to blame all the US's own economic problems on China,” Mr Qin said. ¶ 10:49 AM
