WASHINGTON –- U.S. business owners and lawmakers are losing patience with what they see as China’s reluctance to increase the value of the yuan they contend has given China an unfair advantage, and it remains to be seen whether upcoming talks scheduled between U.S. Secretary Henry Paulson and China’s Vice Premier Wu Yi will be enough to allow a significant increase in the undervalued yuan and avoid what most economists consider to be an inevitable collision between the two countries.
"After years of talk and bluster, protectionism no longer seems like an empty threat. Trade sanctions against China are now all but inevitable,” one U.S. economist was quoted as saying.
China scrapped a fixed exchange rate in July 2005, and since then the yuan has gained 7.2 percent against the dollar. One expert already predicts it will rise 4 percent this year.
Still, U.S. lawmakers say that’s not enough. One news source predicted on March 28 that unless China allows a significant increase, Congress will approve sanctions by next year.
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Strong and effective legislation is likely to pass with a veto-proof margin, stated Senator Charles Schumer, D-N.Y., who is co-sponsoring a sanctions bill with South Carolina Republican Lindsey Graham.
Schumer was further quoted as saying, "There is a clear sense of frustration with China in political circles and among industries around America. We and our Chinese counterparts are looking for tangible results.”
But "protectionist measures have already gone beyond threats,” stated one news source.
Earlier this month, the U.S. filed complaints at the World Trade Organization alleging Chinese piracy of copyrighted movies, music, software and books. Last month, alleging illegal subsidies, the U.S. began assessing duties on glossy paper from China.
In China, one expert argued that any rapid rise in the yuan would erase business owners’ profits. Exports reportedly accounted for about 40 percent of China’s economy last year.
According to one news source, Chinese officials are eager to rein in their trade surplus, but not at the cost of jobs or "social harmony.”
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