'Protectionism' bill: US rapped

'Protectionism' bill: US rapped


BEIJING


31-Jul-07

CHINA'S state-run press yesterday said a new US currency bill smacked of
protectionism as Treasury Secretary Henry Paulson, visiting the Asian giant for
economic talks, called for a stronger yuan.

The English-language China Daily used its main editorial to criticise the bill
which could open the door to US sanctions against Beijing for not allowing the
yuan to rise quickly enough.

"The legislation that smacks of strong protectionism risks undermining ongoing
bilateral efforts to reduce trade imbalances between the two countries," the
China Daily said. "Unfortunately, the new US bill tends to mislead its people
into believing that protectionism can be an answer to its economic woes."

Last week, the Senate Finance Committee overwhelmingly approved the bill that
requires the Treasury to identify nations with so-called "fundamentally
misaligned" currencies that has the potential to open the door to economic
sanctions against Beijing. The China Daily argued efforts were instead needed to
persuade American consumers to consume less and save more to narrow its current
account deficit.

"(China) is resolved to introduce greater flexibility into its foreign exchange
regime at its own pace and reduce its external imbalances," it said, pointing
out recent measures such as a cut in export tax rebates.

Yesterday, Paulson inspected environmental projects in the nation's northwest
before heading to the capital for talks with President Hu Jintao and Vice
Premier Wu Yi.

"The rate of appreciation has gone up considerably over the last year and the
renminbi (yuan) has now appreciated well over nine percent," Paulson said adding
that he would like to see "more, and much more". His visit comes amid growing
pressure to curb the burgeoning US trade deficit with China and moves in the US
Congress to punish Beijing for alleged unfair trade policies.

US lawmakers say the undervalued yuan makes US-bound exports cheaper, thereby
fuelling the trade deficit with China, which hit US$232.5 billion last
year.Paulson also acknowledged high trade tensions with China.

"There is much more tension in the trade area, so this is an important area
where there is less tension and I think it's a good place to start this trip,"
said Paulson. AFP

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