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 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 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 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