Chinese Premier Blasts US for ‘Politicizing’ Trade Deficit

Chinese Premier Wen Jiabao has criticized certain U.S. lawmakers for pressing China to increase the value of its currency yuan.

In an interview with the CNN program GPS in Greece Sunday, Wen said, “Certain people in the U.S., particularly those in Congress, don’t fully know about China. They’re politicizing the problems in Sino-U.S. relations, and in particular, the trade imbalance between our two countries. I don’t think this is the right thing to do.”

The U.S. House of Representatives Wednesday passed a bill that opens the door to punitive tariffs on imports from countries that manipulate their currencies.

On if the yuan’s appreciation would be good for China, Wen said, “The trade imbalance between the U.S. and China is mainly structural in nature because the U.S. has shut down its manufacturing sector and increased its service output. Many Chinese exports to the U.S. are no longer produced in the U.S., and I don`t believe that the U.S. will restart production of these products, which are at the low end of the value-added chain."

"Even if you don`t buy these products from China, you’ll have to buy them from India, Sri Lanka or Bangladesh. And that won’t help resolve the trade imbalance between our two countries."

“Our two economies are closely linked, with China holding 900 U.S. billion dollars in U.S. Treasury bonds. A country’s trade surplus is not necessarily linked to exchange policy.”

The Chinese premier criticized U.S. President Barack Obama’s policy to block low-priced Chinese imports and create jobs by artificially lowering the yuan’s value.

“An iPod is sold for 299 dollars in the U.S., and China in the manufacturing link will only get 4 dollars for it. Of 50,000 U.S. companies registered in China, 22,000 export products to the U.S. So imposing sanctions on exporters in China will also penalize a large number of U.S. companies,” he said.

Wen also asked European countries to oppose trade protectionism. Speaking with Greek lawmakers in Athens Sunday, he said, “China hopes the European Union recognizes China`s full market economy status as soon as possible, eases restrictions on high-tech exports to China, and rejects trade protectionism to foster an environment conducive to healthy growth of our trade.”

yhchoi65@donga.com