|
Reform slowdown in China could hurt ties, US trade chief warns
2006-12-11
A slowdown in reforms in China could hurt ties with the United States, Washington's chief trade negotiator has warned ahead of a visit to Beijing to be led by US Treasury Secretary Henry Paulson. US Trade Representative Susan Schwab said in a Financial Times opinion piece Monday that the Chinese market remained a tough challenge for foreign companies even five years after China joined the World Trade Organization. "Looking back on the past year, we see troubling indications that China's momentum towards reform has begun to slow," Schwab wrote. "We will clearly convey our view that a slowdown in reform hinders China's development and undermines the health of our bilateral ties," she said. Schwab will visit China later this week as part of a high-powered delegation comprising Paulson, US Federal Reserve Chairman Ben Bernanke, Commerce Secretary Carlos Gutierrez and Energy Secretary Sam Bodman. "Voices in China opposing further market liberalization have grown louder and government intervention in the economy, especially at the provincial level, has increased," Schwab said. US companies face fewer blanket prohibitions or prohibitive tariffs but instead have to cope with "an array of regulatory obstacles and government policies that make doing business in China uncertain," she said. She criticized "industrial policies that limit imports of goods, government subsidies that encourage exports and protect non-competitive industries, and regulatory barriers that impede participation in China's market by US service providers." Schwab mentioned sectors from steel to telecommunications, where "massive distortions" exist, and said that for agricultural products, China is "one of the world's least transparent and predictable markets." Treasury Secretary Paulson said in separate article Monday he would push for freer and more open markets in China, arguing that economic relations between the two countries had reached a "pivotal moment." "This is a pivotal moment for China and for our relationship with that country," Paulson wrote in an essay in The Washington Post. "By engaging Chinese leaders with an eye to producing long-term benefits for our two nations, we can build a productive and prosperous partnership for the 21st century." Paulson pointed out that one of the most important topics for discussion will be to help China manage its transition to freer, more open markets, including capital markets. "Every strong, vibrant economy in the world has open, competitive capital markets that attract investment and allocate resources to their most productive uses," he wrote. "Such markets will contribute to sustained economic growth and boost job creation in China. And strengthening and reforming financial markets will ultimately allow the Chinese to freely float their currency." Meanwhile in Beijing, a senior central bank official said the exchange rate was a sovereign issue for the government to decide by itself. "The yuan exchange rate issue is a sovereign issue and the government will take internal and external balances into consideration when making decisions on the yuan," said Yi Gang, an assistant governor for the central bank. Speaking to a financial conference in Beijing, Yi was responding to speculation that the visit by the Paulson delegation could lead to upward pressure on the Chinese yuan.
| 
