As I've written many times, it's tough to bully your banker but the inevitable confrontation between China and the U.S. is nearly at hand. The Chinese have grown so quickly and the trade imbalance between the two countries is simply unsustainable. Regardless of the "band-aid" fixes that China is attempting to implement to slow things down, and prop up their currency, it is already too late. The Chines proverb, "May you live in interesting times" certainly applies to our current reality.
US looks set for trade war with Chinese
TALKS between half the US and Chinese cabinets starting today in Washington look unlikely to head off US legislation that would trigger a trade war with China.
The Chinese Government's triple attack yesterday on its own over-exuberant economy: introducing raised interest rates and bank reserve requirements, and broadening the potential trading band of the yuan - intended to demonstrate its responsiveness to US concerns - was shrugged off by its own markets.
Instead, the Shanghai market powered on, climbing 1 per cent.
The 14 Chinese ministers, led by Vice-Premier Wu Yi, appear not to have brought any concessions strong enough to satisfy the growing US anti-China lobby.
Democrats who now control the US Congress complain about China's $283 billion trade surplus with the US last year, claiming it is substantially due to an undervaluing of the yuan that helps China's exporters, and are calling for a revaluation of up to 40 per cent.
A week ago a trade panel voted to impose special duties of up to 44.3 per cent on imports of polyester fibre from China. A few weeks earlier, the US imposed duties on glossy paper imports.
Several items of new legislation, including one that would impose a 27 per cent tariff on all Chinese goods, and five concerning currency issues alone, are on the table. Their introduction would lead to a full-scale trade war.
New York Democrat senator Charles Schumer said of China's measures, including allowing the yuan to trade higher: "This is a nice gesture, but in the past, most of their gestures have not produced any concrete change."
House Ways & Means Committee chairman Charles Rangel said: "The time for talk has passed; we must now act to end this unfair trade practice that cripples American industries."
