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US-China Relations - 152. page

CNS: Chinese Ambassador: RMB Exchange Rate Is Not the Cause of the US-China Trade Imbalance

On November 13, 2010, China News Service published the contents of a speech that Zhang

Yesui, China’s Ambassador to the United States, gave at the University of Nebraska in Lincoln. In his speech, Zhang observed, “The trade imbalance between the U.S. and China is not caused by the under-valued exchange rate of the RMB, but by structural differences in trade and investment.” 

Zhang suggested that a comprehensive approach to easing the trade imbalance between China and the U.S. was in the works: First, China is trying to achieve economic growth through boosting domestic demand. The 12th Five-Year Plan, which is being drafted, emphasizes the continued effort to expand domestic demand. Second, the U.S. should release its restrictions on the export of high-tech products to China. Third, the U.S. should encourage Chinese businesses to invest in the U.S.

Source: China News Service, November 13, 2010 
http://www.chinanews.com.cn/gn/2010/11-13/2653942.shtml

China Review News: China Should Purchase Strategic Materials Rather Than U.S. Debt

On November 12, 2010, China Review News published an article suggesting China use its foreign exchange reserves to purchase strategic materials instead of U.S. debt. The author explained his reasoning as follows:

According to the U.S. Department of the Treasury, at the end of August 2010, China’s holdings of U.S. debt amounted to $868.4 billion. If the U.S. Treasury yield declines by 20%, China will lose 180 billion U.S. dollars, an average loss of $138 per capita. However, China must find investment channels to maintain the value of its U.S. $2.45 trillion in foreign exchange reserves.

China should take the advantage of the low prices of energy resources and commodities in the global market and use its foreign exchange reserves to purchase materials for strategic reserve of resources, such as energy and mineral resources.

Source: China Review News, November, 12, 2010
http://gb.chinareviewnews.com/doc/1015/0/1/5/101501543.html?coluid=148&kindid=0&docid=101501543&mdate=1112002419

China News Service: U.S. Publicity about Free Navigation in the South China Sea is to Contain China

China News Service recently published a special article written by Liu Feitao, a scholar from the China Institute of International Affairs. The article questioned U.S. public discussion about “freedom of navigation in the South China Sea.” Liu stated, “Since July, on various public occasions, U.S. politicians have frequently mentioned ‘freedom and security of navigation in the South China Sea,’ claiming it ‘is in the national interest of the U.S.’ and that the U.S. opposes ‘any activities obstructing freedom of navigation.’”

The article says that the fact that the U.S. purposely brought up an issue that was a non-issue to begin with is really because of “well-thought-out ulterior motives.” The author believes that the U.S. has three reasons for doing this: first, to maintain the U.S. military hegemony in the Asia-Pacific region; second, to seek support in maintaining its Asia-Pacific strategy; and third, to use the South China Sea issue to contain China.

Source: China News Service, November 9, 2010
http://www.chinanews.com.cn/gn/2010/11-09/2642310.shtml

The Second Stage of the Currency War Is China’s Biggest Worry

China Business News published an article in which Mei Xinyu, a scholar at the Research Institution of the Ministry of Commerce, asked two questions. What will the “currency flood” produced by the core country (the U.S.) bring to China? What effects and consequences will the “currency war” have?

The article said that currency depreciation and loosening of the currency supply is only the first stage of the currency war. The second stage of the currency war, when the core country re-tightens the currency policy, will create the real blow. Looking at a longer time frame, pressure from the export of inflation is not the biggest blow of the currency flood. The second stage of–currency re-tightening–will bring about massive reversal of capital flow and a debt crisis.

Source: China Business News, November 8, 2010 
http://www.yicai.com/news/2010/11/591485.html

China Radio International: U.S. Monetary Policy Hurts China’s Economy

The U.S. has created a great challenge for China’s economy, China Radio International Online reported. The U.S. flooding the market with U.S. dollars has multiple impacts and effectively devalues the U.S. dollar: 1. It makes China lose money on its foreign reserve holdings of U.S. dollar based assets, such as U.S. Treasury bonds. 2. It puts great pressure on the renminbi to appreciate and hurt China’s export economy. 3. It provides the market with extra money that may come to China and continue pushing up China’s stock and housing market bubble. 4. It causes a big increase in the price of commodities such as oil, food, and iron ore, and in turn, it creates the pressure of inflation on China’s economy as China imports large quantities of these commodities. 5. It forces the Bank of China to increase the renminbi supply to maintain the renminbi exchange rate.

Source: China Radio International Online, November 9, 2010
http://gb.cri.cn/27824/2010/11/09/5311s3049187.htm

Guangming Daily: On China Enduring a U.S. Trade War

According to an article on the Guangming Daily Online Website, the U.S. has intensified its trade war against China. Over the past 2 weeks, the U.S. filed 24 trade actions against China. These cases of trade violation exhibit a new pattern: 1. They focus on high value-added products and new industries; 2. Instead of using anti-dumping charges, the new cases are an outgrowth of 337 investigations and 301 methods of investigation; and 3. They represent highly-synchronized attitudes and actions on the part of all U.S. departments.

The article also stated that the exchange rate war was just the beginning of the trade war. “The exchange rate debate is an excuse. Starting a trade war against China is the fundamental reason.” The article praised China for not taking action to counter the U.S. trade war. It also warned the U.S. that, given its extremely weak economy, it will not be able to bear the consequences of a Sino-U.S. trade war.

Source: Guangming Daily Online,  November 1, 2010
http://guancha.gmw.cn/2010-11/01/content_1352482.htm

Huanqiu: The U.S. Uses the RMB Exchange Rate Problem as a Scapegoat

According to an October 28, 2010, article in Huanqiu, the United States has been strategically depreciating the U.S. dollar. The strategic depreciation of the dollar is leading to the U.S. dollars’ strategic violation of contracts, and is shrinking and even offsetting its foreign debt.

The article concludes that “the RMB exchange rate” problem is a “scapegoat” that the U.S. uses to transfer its internal contradictions and mislead international public opinion.

Sources:
Huanqiu, October 28, 2010
http://opinion.huanqiu.com/roll/2010-10/1207764.html

Huanqiu: U.S. Strategy to Encircle China Is Only aStraw Fence

Chou Hao, a scholar from the PLA National Defense University, published an article in Huanqiu (a subsidiary of Xinhua), commenting on the U.S. strategy toward China in China’s neighboring countries. The article said that the U.S. recently increased its involvement in the affairs of China’s neighbors. Structurally, the strategic fence that the U.S. has set up to surround China is composed of three main parts: The strongest section is the massive military networks in the military bases of China’s neighbors; the key links are the military coalitions based on the traditional allies of Japan and South Korea; the perimeter is made up of the partner countries the U.S. is trying to win over, including India and Vietnam. Chou believes that such an encirclement strategy, though a “perfect” model to prevent and restrict China, has its inevitable weaknesses.

Source: Huanqiu (Global times), October 19, 2010
http://opinion.huanqiu.com/roll/2010-10/1180889.html