Hu’s Chance

Chinese President Hu Jintao’s upcoming visit to the United States, postponed following hurricane Katrina, will be different from previous bilateral meetings. This time, the countries’ presidents will meet at a time of intensive American attention to the US-China trade balance and other economic issues, such as protection of intellectual property rights.

With China’s US trade surplus reaching $200 billion last year, American sentiment is growing to take strong measures. Some have suggested that the trade imbalance is related to China’s currency peg to the US dollar. A recent Congressional bill has called for imposing a 27.5% punitive tariff on Chinese imports.

In fact, the trade imbalance is more complicated than the currency issue per se. Globalization has strengthened the ability of capital to flow to wherever investment promises the highest returns; likewise, competitive manufactured products from low-wage economies will flow in the other direction. That is why China fascinates American investors, among others, and why US customers buy Chinese products.

To continue reading, please log in or enter your email address.

To continue reading, please log in or register now. After entering your email, you'll have access to two free articles every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you are agreeing to our Terms and Conditions.

Log in

http://prosyn.org/ZJatzwv;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.