China hits out at US 'protectionism'

November 16, 2009 08:24:45 PM

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China on Monday accused the United States of increasing protectionism and said American calls to let the yuan rise were "unfair", as US President Barack Obama visited the Asian giant.

The comments from a Chinese commerce ministry spokesman earned a quick rebuttal from senior US officials speaking in Beijing, who said a trade war was in neither country's best interests.

"We used to see that the United States was an innovation-driven US. But what we are seeing now is an increasingly protective US," commerce ministry spokesman Yao Jian told reporters at a regular monthly briefing.

"It is necessary to create for enterprises a stable and predictable environment, including (stable) economic and foreign exchange policies, to help the global economy grow steadily and China's exports recover," he said.

Yao added that the United States had "continued" to let the dollar drop "to improve its competitiveness" while pressing for the yuan's appreciation.

"It is detrimental to the global recovery and is unfair for (the US) to require other (currencies) to rise while allowing the dollar to keep slumping," Yao told reporters.

But US Commerce Secretary Gary Locke said Washington was not at fault.

"The United States is not engaged in increased protectionism," Locke told a luncheon in Beijing.

"President Obama has indicated many times that we can not engage in protectionism -- protectionism invites retaliation which then results in a trade war ... and in a trade war everyone loses."

Washington has angered China in recent months by imposing tariffs on Chinese tyres and preliminary duties on some steel products -- moves which Beijing has repeatedly slammed as protectionist and as impeding the global recovery.

But Locke said the recent action against Chinese tyres was "part of the natural order of business" and was not a sign of protectionism.

"China initiates dumping cases against many US companies just as the United States initiates dumping cases against companies from Europe," Locke said.

Yao had earlier lashed out at Washington's restrictions on high-tech exports to China, attributing the yawning US trade deficit with the world's number three economy to its own "faulty" policy.

"The United States should seriously review its exports control policy, not create various trade barriers to protect domestic industry," he said.

"The United States and other Western countries were active advocates for free trade... but we now suddenly find a protective US."

Commerce Minister Chen Deming was to meet Locke on Monday to discuss, among other things, US export controls against China and the protection of intellectual property rights, Yao said.

Obama arrived in Shanghai late Sunday for a three-day mission aimed at convincing Beijing that Washington is its partner, not its rival.

He is expected to raise trade tensions with his counterpart Hu Jintao and also urge China to reconsider the value of the yuan, which has been effectively pegged to the dollar since July 2008 and is deemed by Washington as being kept artificially low to boost Chinese exports.

Obama arrived in Beijing late Monday.

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