The China Syndrome: Growing US Anger at China's Trade Surplus

There's discussion going on in an ever more impatient US Congress about possible measures to impose punitive tariffs on imports of Chinese goods. The United States' political and corporate leadership feel mounting anger at China's ballooning trade surplus. "Although China has embraced currency flexibility as a policy goal, Chinese authorities are not moving quickly enough," said Mark Sobel, Treasury deputy assistant secretary for international monetary and financial policy, at a hearing of three House committees.

China's central bank continues to impose currency controls that keep the Yuan down against the Dollar, which cause Chinese trade goods to be undervalued against those of the United States and, therefore, cheaper to buy in foreign nations, including the US. Strategic Economic Dialogue Meetings scheduled between leaders of the two economically powerful nations scheduled for May 23^rd and 24^th are meant to address this artificial currency control as well as the relative ease of product piracy in China, both of which factors are felt by analysts to be keeping China's already huge trade surplus growing ever greater, which in turn is harming US exporters and depressing domestic sales of American made products.

China's trade surplus is up an astounding 88%, to over $63 billion, as of the end of April. While April imports rose by 21.3% in China in April, that nation's exports rose by 26.8%.

"The yuan will have to appreciate further. The pace is already speeding up ahead of (Vice Premier) Wu's arrival in the U.S. ((which will)) alleviate tension and create a better atmosphere," said a DBS Bank senior economist speaking from Hong Kong.