Economic Policy Weekly #2

China VP defends economic policies to U.S business chiefs

Article

http://content.usatoday.com/communities/theoval/post/2012/02/china-vp-defense-economic-policies-to-us-business-chiefs/1#.T6s2BuuLOSo

In what was billed as a major policy speech, Chinese Vice President Xi Jinping told U.S. business leaders today that Washington and Beijing must respect each others' "core interests and concerns."

CAPTION
By Karen Bleier, AFP/Getty Images

A day after hearing from President Obama and other top administration officials that China must do more to level the playing field for U.S. businesses competing against Chinese firms, Xi made the case that China has already made significant strides in balancing trade policy. Earlier Wednesday, House Speaker John Boehner and Majority Leader Eric Cantor met with Xi and complained of "deficiencies" in China's enforcement of intellectual property laws.

In less than 10 years, U.S. exports to China have grown by 468% and China has become the fastest growing export market of the United States, Xi said. China's overall trade surplus has dropped from the pre-financial crisis level of over $300 billion to $150 billion. In 2011, China's trade surplus-to-GDP ratio dropped from over 7% to 2% and moved into the reasonable range by international standards. The yuan has also appreciated significantly in recent months.

"To be frank, it is very important for addressing China-United States trade imbalance that the United States adjusts its economic policies and structure, including removing various restrictions on exports to China, in particular, even control armed civilian high tech exports to China as soon as possible," Xi said in remarks before the U.S.-China Business Council. "This will help balance China-U.S. trade, stimulate economic growth and job creation in the United States and improve the balance of U.S. international payments."

Among the titans of industry in attendance were Muhtar Kent, CEO of Coca-Cola; Tom Donohue, president of the U.S. Chamber of Commerce; and Andrew Liveris, president of Dow Chemical.

U.S. business leaders complain that a full decade after China entered the World Trade Organization, Beijing continues to create unfair conditions through undervaluation of their currency, heavily subsidizing major industries, and placing restrains on exports of vital raw materials.

Obama has filed five WTO complaints against China since taking office.

Xi travels to Iowa today, and will make a stop in the Mississippi hamlet of Muscatine— a small town he visited during a 1985 visit to the United States. Iowa Gov. Terry Branstad will host a dinner in honor Xi in Des Moines tonight. Xi will take part in the U.S-China Agriculture Symposium on Thursday.

He travels to Los Angeles on Friday, where Vice President Biden will meet up with him.

Response:

Chinese Vice President Xi Jinping states that “Washington and Beijing” should respect each other. It was quite shocking that “Obama has filed five WTO complaints against China since taking office.” It seems as if China and the US relationship are not as great as it appears. One of the suggestions from China is that in order to imbalance the trade we need to “adjust the economies policy and structure, including removing various restrictions on exports to China, in particular, even control armed civilian high tech exports to China as soon as possible.” It is said to help balance the trade and create more jobs. This article in particular seems to address an economic policy but did not discuss the US response to the China’s proposal. This article also adds to the fact that China is indeed growing quickly and that its currency is appreciating making it more expensive for the US.