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US economists hit out at American protectionism
2006/03/21

    BEIJING, March 20 (Xinhua) -- U.S. economists and business leaders attending the China Development Forum 2006 have raised concern over the negative impact of rising American protectionism on the Sino-U.S. relations and the global economy.

    "The Sino-U.S. relations are perhaps the world's most important bilateral economic relationship in the 21st century. That relationship is now at risk, and if not attended to it could backfire, with significant negative impact on China, the United States, and the broader global economy," Stephen Roach, chief economist of investment bank Morgan Stanley told the forum that closed in Beijing on Monday.

    The U.S. government is expected to decide by the end of March if China is guilty of currency manipulation. It has been suggested that a 28 percent punitive tariff will be imposed on Chinese imports if the U.S. finds China at fault.

    The threat of higher tariffs on Chinese exports if China doesn't revalue its currency is just a tip of the iceberg of mounting protectionism in the United States, he said.

    Protectionism is evident in preventing the acquisition of Unocal by a Chinese company and an east coast shipping facilities by a Dubai company, said Roach.

    The rising protectionism in the United States is partly due to concerns of the middle class as a result of the phenomena of growth without job or wage increases, he said.

    U.S. politicians fuelled the trend by playing "a classic political blame game", with China being increasing singled out as the scapegoat, he said.

    Speaking to journalists on the sidelines of the forum, Nobel prize laureate Joseph Stiglitz repeated his view that the macro-economic policy of the United States, not China's currency policy, is to blame for the trade and fiscal deficits of the United States.

    "The issue of exchange rates at most would effect on which country it has a deficit with, not whether the deficit exist," he said.

    Stiglitz said it is correct and important for governments to maintain exchange rate stability, as any sudden change will cause market chaos.

    Maurice Greenberg, chairman and chief executive officer of C.V.Starr & Co., Inc, said as one of the main advocate of globalization, the United States should not use protectionism to protect its economy as it will damage globalization.

    He urged both parties to use their wisdom and try to avoid confrontation. Enditem

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