US-China Relations - 158. page

On November 12, 2010, the International Herald Leader reported that Beijing recently started a round of intensive diplomatic offensives in response to the U.S. employment of a surrounding and blocking strategy against China. Five out of the nine CCP Politburo Standing Committee Members, including Hu Jintao, Wen Jiabao, Jia Qinglin, Wu Bangguo, and Zhou Yongkang, have visited foreign countries in the past two months. Their foreign visits focused on Europe (the EU, France, Portugal, Greece, Belgium, Italy, Poland, and Turkey), Southeast Asia (Cambodia, Indonesia, and Thailand), and India. [Ed: On November 14, Xi Jinping also started a series of visits to Singapore, South Africa, Angola, and Botswana, but this was not mentioned in the article.]

The article stated that the U.S. has intensified its Asian diplomacy and has focused on the security issue. It labeled China a “threat creator” and has been marketing itself as “big brother” to those of China’s neighboring countries that fear China. China has countered with economic, trade, and cultural diplomacy, since “its economy and trade are China’s strength.” “Though China should not expect much strategic gain from Europe, diplomatic success in Europe can boost China’s confidence while it faces setbacks in Asia.”

Source: International Herald Leader, November 12, 2010
http://news.xinhuanet.com/herald/2010-11/12/c_13603314.htm

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

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 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

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

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

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

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