MercoPress. South Atlantic News Agency

US/China clash over “imbalances” and “politicizing trade”

United States Treasury Secretary Henry Paulson urged China to address “persistent trade and financial imbalances” as bilateral high-level discussions kicked off in Washington.

US firms have criticized China, saying it keeps the Yuan low to boost exports, threatening American jobs. But China's vice premier Wu Yi warned the US it should not "blame others for our domestic problems". Mr Paulson told delegates that the US was "not afraid" of competition from China, but that the US was concerned about the "pace" of policy change in the country. However, Ms Wu did warn that "politicizing trade and economic issues is absolutely unacceptable" and would "complicate the situation". "We're willing to take effective measures together with the US side to address bilateral trade imbalances," she added. "These measures include increasing imports from the United States by China." There is increasing anxiety in the US over the growing trade deficit with China, which last year surged to a record 233 billion US dollars. These fears have prompted members US Congress to press for action against China, with critics claiming the price of the Yuan is kept artificially low, giving China's industry an unfair competitive advantage. Some US Congressmen say the Yuan should be revalued by up to 40%. US sources estimate a sixth of all manufacturing jobs have been lost to cheap Chinese imports. Since the Chinese government allowed a limited float of the Yuan last year, it has gone up by about 5% against the US dollar. Last week, the People's Bank of China increased the amount that the Yuan can appreciate each day from 0.3% to 0.5%. While that was a useful gesture of goodwill ahead of the talks, many currency traders say that because the central bank sets the rate at which the currency starts each day it will make little practical difference. China has also been accused of failing to protect the patents and copyright of American companies on goods such as computer programs and DVDs. The US has also made a recent complaint to the World Trade Organization about Chinese government subsidies. But many economists argue that these factors have a relatively small impact on the trade imbalance. They say the deficit in US international trade is due to the fact that American consumers save very little - they buy large amounts of imported goods while consumers in China and other Asian countries save a great deal. Many also say the deficit in the American government's finances contributes to the trade imbalance. Another issue on the discussion table was food safety following a rash of deaths among pets fed on Chinese imported food. Secretary of Agriculture Mike Johanns and Secretary of Health and Human Resources made the food safety presentation. An in depth discussion on the issue is scheduled for tomorrow announced Commerce Secretary Carlos Gutierrez. On Thursday Wu and the Chinese delegation are expected to visit Congressional leaders, among which Nancy Pelosi, president of the Lower House and one of the main critics of China's human rights policy and record.