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��Home>>Business
Top minds in heated debate on RMB, trade
www.chinanews.cn 2006-06-23 09:44:48
CPPCC adviser and well-known Chinese economist Lin Yifu answers questions
from the press in Beijing on March 6, 2006 (sina)
June 23 - A heated debate broke out Thursday over the effect of the
renminbi's value on the Sino-US trade imbalance.
Renowned Chinese economist Justin Yifu Lin and leading US trade expert
Nicholas Lardy argued over whether the currency's value should be
increased to help reduce China's exports to the US.
Lardy, a senior fellow of the Washington-based Institute for
International Economics, said "the US dollar has been overvalued and
China's currency has been undervalued for a long time."
Addressing a seminar in Beijing, he said he didn't think the renminbi's
value was the most important factor influencing trade between the two
nations, however he still urged China to appreciate the currency.
He also claimed the US export licence system which China has bitterly
complained about is not a major factor in the imbalance.
But his claims were rejected by economics professor Lin.
Lin, who is based at Peking University's China Centre for Economic
Research, said an appreciation of the renminbi would not necessarily
benefit the US economy.
Many of the goods exported by China, he pointed out, are no longer
produced in the US, and if the US turns to other countries for them it
will risk paying higher prices.
Lin said the current deficit was caused by the different configurations
of industries in China and the US, with the former producing low-tech
products and the latter high-tech products and services.
Appreciating the renminbi may not dampen Chinese exports, warned Lin.
Some Chinese supplies are not easily replaced by supplies from elsewhere,
he argued, and if the demand remains the American deficit could even
expand.
Lardy did accept that the trade imbalance was caused by China being the
final point in the Asian supply chain, with a large proportion of exports
to the US not actually produced by China.
For example, 60-70 per cent of the value of China's manufacturing
products is imported first and then exported after assembly. While for
electronic appliances, the ratio is as high as 90 per cent, he said.
But Lardy defended the US export licence system, saying: "It's very
common to hear from Chinese officials that the export licence system is a
cause of the bilateral trade imbalance, and I don't think this is a
likely significant factor."
He quoted figures demonstrating that the US Government has approved, on
average, 80 per cent of applications for technology exports to China, and
the value of the products and technologies that have failed to earn
government approval account for only a small portion of exports.
In 2005, he said, the value of unapproved technologies was about US$12
million, or 0.3 per cent of the bilateral trade.
But Lin insisted that Lardy underestimated the negative significance of
US export regulations on China, which he saw as a trade barrier.
Despite the relatively small number of applications that were actually
turned down, the system may have had a wider impact on potential export
applicants, Lin pointed out.
"If the US treated China as equally as its partners Japan, South Korea
and others, I think US exports to China would soar," said Lin.
His words follow a promise from US Undersecretary of Commerce for
Industry and Security David H. McCormick in late May, that the US would
"update" its export policies to China, and look for ways to reduce the
administrative burden on civilian trade.
Yesterday's seminar was arranged by the China Development Research
Foundation, an organization affiliated to the central government.
Copyright� 2004 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.
Disclaimer: viewpoints in the website do not represent China News Service
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