US, China Exchange Words Over Currency and Trade

VOA reports on a recent talk given by U.S. Ambassador at Tsinghua University in Beijing. Listen to the report here:

Ambassador Huntsman said the Obama administration’s first year in office focused on building a Sino-American relationship that is now being tested in its second year.

“To put our relationship on a more stable and mature footing, we have to de-link our differences on bilateral issues from our cooperation on global issues, including nonproliferation,” he said.

One of the main issues of contention is a U.S. government sale of weapons to Taiwan, a separately governed island China regards as its territory. Another irritant is President Obama’s meeting last month with Tibet’s exiled spiritual leader, the Dalai Lama. China accuses the Dalai Lama of seeking independence for Tibet, which is a Chinese region.

One Tsinghua student asked Huntsman about another thorny issue, increasingly louder calls for China to allow its currency to rise in value.

“My Chinese friends like to picture this as just an American issue and I would like to say that there are many countries that feel the same way, many of China’s largest trading partners feel that way,” said Huntsman. “I was with some yesterday. There are some in Europe, some in South America, but more than that the IMF, which is not a country, but has many country participants, has spoken out on this issue.”

Read also “U.S. Ambassador Calls China’s Currency Stance ‘a Real Concern’” from the New York Times.

In Forbes, economists Nouriel Roubini, Rachel Ziemba and Adam Wolfe write about the U.S.-China relationship:

Today we examine the quest for the new normal between the world’s largest creditor and its largest debtor. Given the importance of the relationship to global trade, growth and security, we believe that the two countries will avoid a full-blown confrontation, but uncertain relations and tit-for-tat trade policies could constrain global growth.

The friction suddenly afflicting the world’s most-watched bilateral relationship stems from a struggle on the part of both China and the U.S. to deal with the changing dynamics of global economic and political power and influence since the financial crisis. To some extent the financial crisis exacerbated ongoing structural changes that had elevated the role of emerging markets in the global economy and increased their influence in debates on financial regulation, trade and currency policy.



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