China threatens trade war with US over yuan

Wednesday, 05 Oct 2011

A war of words has erupted between China and the United States, after a US senate vote to move ahead with a bill that would punish China for keeping the value of its currency low and the spat could trigger wars of another kind which could have a more tangible impact on the fragile global economy.

Mr Ma Zhaoxu spokesman of Chinese Foreign Ministry warned on China's official government website that “The yuan bill passed by the US Senate will not solve its problems, such as insufficient savings, high trade deficit and high unemployment rate, but it may seriously affect the whole progress of China's reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see.”

Mr Ma added “By using the excuse of a so called currency imbalance, this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates World Trade Organisation rules and seriously upsets Sino US trade and economic relations. China expresses its adamant opposition to this.”

Echoing the Foreign Ministry's trade war warning, the People's Bank of China pointed out that factoring in inflation, the yuan has appreciated greatly and is close to a balanced level in line with China's trade situation and restructuring needs.

The US Senate vote opened a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the US government to slap countervailing duties on products from countries found to be subsidizing their exports by undervaluing their currencies. US lawmakers, eyeing the 2012 elections, said keeping China's currency undervalued had cost American jobs and that a fairer exchange rate would help cut an annual trade gap Washington puts at more than USD 250 billion.

The latest tensions between China and the US are un welcome at a time when the global economy is in a precarious position. There are also concerns of a currency war should China the largest foreign holder of US government debt retaliate by dumping US Treasuries.

(sourced from Todayonline)

US takes two China trade disputes to WTO

Monday, Feb14, 2011


WASHINGTON (AFP) – The United States said Friday it had taken trade disputes with China over US steel imports and electronic payment services to the World Trade Organization.

The US requested the Geneva-based WTO to establish two panels to settle the disputes, US Trade Representative Ron Kirk said in a statement.

The WTO action marked an escalation in the long-running list of trade disputes between the world's largest economy and its fast-growing Asian rival.

One case addresses China's imposition of antidumping duties and countervailing duties on imports of grain-oriented flat-rolled electrical steel from the United States, the statement said.

The other case challenges China's allegedly discriminatory and restrictive treatment of US suppliers of electronic payment services.

Previous US attempts to resolve the two disputes directly with China had failed, the USTR said.

"We are troubled by the procedures and decision-making employed by China in its trade remedy investigations, which have now led to serious restrictions on exports of American steel," Kirk said.

"We also remain deeply concerned about China's continuing efforts to reserve its domestic payment card market for one state-owned enterprise, to the exclusion of American credit and debit card companies."

Kirk said that in each of those disputes, the "USTR will be pressing to ensure that we obtain the trade benefits provided by the WTO agreement, in particular the American jobs and economic growth at stake as a result of China's actions."

The US accuses China of flouting WTO rules in applying additional duties on imports of the electrical steel, used by the power-generating industry in transformers, reactors, and other large electric machines.

China imposed duties on specific steel imports in April 2009, saying the American steel had been dumped -- sold at less than fair market value -- into its market and was subsidized.

The USTR said that China?s antidumping and subsidy determinations in the case appeared to violate numerous WTO requirements, including initiating the proceedings "without sufficient evidence" and failing to disclose "essential facts" underlying its conclusions.

"We have watched with growing concern China's resort to additional duties on US exports," Kirk said.

"It is important to ensure that China is held to the WTO rules and so prevent any unjustified duties from affecting hundreds of millions of dollars of US steel exports to China," he added.

The two largest US manufacturers of electrical steel are in the struggling "rust belt": AK Steel Corporation, based in Ohio, and Allegheny Ludlum, based in Pennsylvania.

In the second case, the US accused China of creating a "national champion" to monopolize the country's operation of electronic payment transactions, which it estimated was worth several hundred billion dollars in 2010.

While most of the world's top providers of electronic payment services for credit and debit cards are headquartered in the United States, the USTR said, China prohibits foreign suppliers from handling the typical payment card transaction in China.

"China's regulator of electronic payment services, the People's Bank of China, has issued a series of measures -- dating back to 2001 -- that provide a Chinese domestic entity, China UnionPay (CUP), with a monopoly over the handling of domestic currency payment card transactions in China while excluding other potential suppliers," the US trade office said.