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"As long as human rights are violated, there can be no foundation for peace. How can peace grow where speaking the truth is itself a crime?"

US business fears 'downward spiral' in China trade

September 30, 2010

Reuters
September 28, 2010

Congressional passage of a bill to pressure
Beijing to revalue its currency could further
harm US-Chinese trade relations already hampered
by mutual mistrust and suspicion, US companies
invested in China said on Monday.

With US congressional elections looming on Nov 2,
many US lawmakers who blame unfair Chinese trade
practices for American job losses are eager to
show they are taking steps to get tough with
Beijing and help tackle high US unemployment.

The US Congress is considering legislation that
would treat what lawmakers call China's
undervalued yuan currency as an export subsidy, a
step that would give the US Commerce Department
increased ability to slap duties on Chinese goods.

The US House of Representatives is expected to
pass the bill this week, but its future in the Senate is uncertain.

"If we take this additional step, it's going to
continue this downward spiral," Tim Stratford, a
former US trade official who was part of a
delegation visiting Washington from the American
Chamber of Commerce in Shanghai, told reporters.

The American Chamber of Commerce in Shanghai
bills itself as the "voice of American business"
in China. Its board of governors includes top
company officials from the Chinese operations of
Citibank, FedEx, Goodyear Tire & Rubber, APCO
Worldwide, Corning and General Motors.

The US Commerce Department on Monday set final
duties ranging up to 61% on hundreds of millions
of dollars of copper pipe from China in one of
several disputes causing friction between the two countries.

The move came a day after China upheld heavy
duties on imports of chicken parts from the
United States, as Beijing stood firm on a
long-running dispute over mutual market access.

Chinese Vice Commerce Minister Chen Jian,
speaking to reporters during a visit to Taiwan,
said China would set policy on its currency according to its own needs.

"We'll make a decision based on our own economic
development levels and the world economic
situation. If it takes the yuan to appreciate for
our economy to develop, we will do it even though
it would have negative impact," Chen said. "But
it is redundant for the US Congress to pass the proposal."

The US House Ways and Means Committee approved
the yuan bill last Friday. The full House is
expected as early as Wednesday to pass the bill
with broad bipartisan support. But it may never
become law because it is not currently scheduled for action in the Senate.

ONGOING QUARRELS

In past months, Washington and Beijing have also
quarreled over Chinese government procurement
policies, Internet censorship, US arms sales to
Taiwan and American sympathy for the Dalai Lama,
the exiled Tibetan spiritual leader.

Bilateral ties have been complicated by tensions
between China and neighbors South Korea and Japan
- US security allies. US support for Southeast
Asian nations with competing territorial claims
with China in the South China Sea is also a point
of contention between the United States and China.

If Congress passes the currency bill and
President Barack Obama signs it into law, the
Chinese government could retaliate in a number of
ways, ranging from steps to discourage US imports
to making it harder for US companies to do business in China, Stratford said.

Stratford, who until last year served as
assistant US trade representative for China, said
China's government and people have a lower
opinion of the United States amid constant
American complaints about Chinese trade practices and other concerns.

Chinese companies and consumers, sensitive to the
political tensions between the two countries,
also could shun the United States and turn even
more to suppliers such as Japan, Germany and
Brazil for imported goods, he said.

"The chance of these two types of things
happening is quite great because the Chinese will
find it offensive that Congress feels it needs
this type of legislation," Stratford said.

US poultry producers have been reminded of how
they got caught in the cross-fire after President
Barack Obama slapped duties last year on Chinese tires.

On Sunday, the Chinese Ministry of Commerce set
final anti-dumping duties ranging from 50.3% to
105.4% on chicken parts from the United States,
hitting companies such as Tyson Foods, Pilgrim's Pride and Sanderson Farms.

Those were in addition to final countervailing
duties that China imposed last week to offset
alleged US government subsidies to poultry.

The USA Poultry & Egg Export Council flatly
rejected that it "dumps" product in China at
unfairly low prices or benefits from government
subsidies. It said it was a victim of Chinese
retaliation for Obama's tire decision last year.

"It's truly unfortunate that our industry has
ended up in this situation, especially because
the issues that created this disaster were not of
our making and are beyond our control," the group's president Jim Sumner said.
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