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US launches new task force on China trade
Updated: 2006-02-15 13:33

The Bush administration declared Tuesday that the United States has entered a new phase in its economic relationship with China and promised "rigorous enforcement" of laws aimed at curbing what the China's critics see as "unfair" trade practices.

The pledge was contained in a 29-page administration review of America's economic relationship with China that was released four days after the government reported that the United States recorded a $202 billion trade deficit with China last year. That's the highest ever recorded with a single country and up 25 percent from 2004.

U.S. Trade Representative Rob Portman, whose office prepared the new review, said the administration intended to use "all options available" to address various problems with China.

"Our U.S.-China trade relationship lacks equity, durability and balance," Portman said at a news conference. "As a mature trading partner, China should be held accountable for its actions and required to live up to its responsibilities."

Portman announced creation of a trade enforcement task force in his office that will be headed by a chief counsel for China trade, a new position.

He called it unprecedented for the USTR to devote an enforcement team to a single country. He said previous administrations had not done this when the United States was running huge trade deficits in the 1980s and 1990s with Japan.

Portman said the administration intended to focus on the situation of China's intellectual property. It also will focus on China's committments made in joining the WTO and halting various government subsidies to Chinese companies.

Portman said the administration would discuss its new initiatives at an April 11 meeting in Washington with top Chinese economic officials.

China tells US not to politicize the issue

Chu Mao-ming, a spokesman for the Chinese embassy in Washington, said he could not comment directly on the new report because he had not yet seen it. But he said China did not want to "politicize trade issues. We hope that trade relations between China and the United States will be conducted under the principals of development, equality and mutual benefit."

China is willing to work with the United States to seek a balance in their trade, but it will not help if political elements are embedded in the issue, a top Chinese legislator said Tuesday.

Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, said China and the United States should ease frictions in their trade ties and find a win-win solution through consultations.

"We are equal partners and we should deal with the problem calmly Don't politicize it," Cheng told a Sino-US trade forum.

Cheng's remarks came amidst the backdrop of rising pressure from US congressmen to the Bush administration to find fault with China.

US senators Byron Dorgan and Lindsey Graham introduced legislation last week to repeal the normal trade relations status between the two countries.

The US Congress granted China permanent normal trade relations status in 2000, paving the way for its entry to the World Trade Organization.

Another piece of legislation proposes to impose across-the-board tariffs of 27.5 per cent on Chinese imports unless Beijing revalues its currency.

Cheng admitted that China has a big trade surplus with the United States, but clarified that it is not the country's aim.

"What we should bear in mind is that both sides reap benefits from trade co-operation," he said.

He quoted a study by US investment bank Morgan Stanley estimating that US consumers had saved US$600 billion in the past decade by buying cheaper goods made in China.

China had also used a significant chunk of foreign exchange reserves, partly earnings from its trade surplus, to buy US bonds. At the end of 2005, China held US$300 billion in US treasury bonds.

Cheng called on the United States to help reduce its deficit with China by relaxing restrictions on high-tech exports only 10 per cent of China's high-tech imports come from the United States.

"I would say if you could sell a space shuttle to China, the situation would be greatly improved," Cheng said. "That's a joke. But China has to be allowed to buy more than Boeing airplanes."

Vice-Minister of Commerce Yi Xiaozhun told the forum that China had done a lot to reduce the trade deficit, with imports from the United States witnessing the highest growth in 2005.

China reported that its surplus with the United States last year was US$114.2 billion. Using different statistical standards caused the discrepancy with the US figure.

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