|Protectionist Sentiment against China Grows|
|Key Words||Tariffs, Imports, Exports, and Protectionism|
|News Story||In a speech made prior to a trip to Beijing, Treasury Secretary Henry M. Paluson Jr. said that Chinese leaders were imperiling their nation's future by engaging in policies that America and other countries see as unfair. The Chinese central bank continues to keep the value of its currency, the yuan, artificially low relative to the dollar, Mr. Paulson explained. The effect of this strategy is to make Chinese exports cheaper to the rest of the world, while making imports into China from its numerous trading partners more expensive for Chinese consumers. Artificially high prices for imports discourages sales of foreign goods within China.
"Maintaining and relying on an overly rigid exchange rate and outdated administrative controls increases the risk of boom and bust cycles," Mr. Paulson said. Furthermore, he added, China's "currency exchange rate is increasingly being viewed by their critics as a symbol of unfair competition." Mr. Paulson said that protectionism was preventing China from doing more to open itself up to competition, and was in turn breeding protectionist sentiment in America. He went on to say, "those nations that reform their economies and open themselves to competition benefit their citizens greatly" and "have better jobs, improved living standards and greater opportunity."
Mr. Paulson ended his talk by saying, "I believe that if China doesn't move quickly to continue reforming its economy, it will face a backlash form other economic stakeholders. This backlash would not benefit any of us."
Mr. Paulson did not explicitly refer to specific actions that the U.S. and others might take in retaliation to China's central bank actions, but aides to the Secretary said that Paulson was referring to legislation that would place tariffs on imports from China if its government did not act to let the yuan rise relative to the dollar.
Senators Charles E. Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican are sponsoring the bill that would put the tariffs in place. They are currently holding back on pushing the bill pending Mr. Paulson's trip to Beijing, but have vowed to press hard for its passage if the Secretary does not get some desired action from the Chinese.
|Source||Steven R. Weisman, "Paulson Says China Hurts Itself With Economic Policies", The New York Times Online, September 13, 2006.|
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