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TRADE WARS
Yuan likely to dominate China-US trade talks
by Staff Writers
Beijing (AFP) Nov 18, 2011

US senator raises trade rows with Chinese delegation
Washington (AFP) Nov 17, 2011 - A key US senator said he had delivered the message that "China's unfair trade practices will not be tolerated" in a meeting Thursday with the head of the Asian giant's vast sovereign wealth fund.

Democratic Senator Bob Casey said he met with China Investment Corporation chairman Lou Jiwei; Zhou Wenzhong, a former Chinese ambassador to Washington now secretary-general of Boao Forum for Asia; and Zhang Guobao, chairman of the advisory board of China's National Energy Commission.

"I made clear that China's unfair trade practices will not be tolerated," said Casey, who has pushed President Barack Obama's administration to formally accuse Beijing of keeping its currency artificially cheap.

"For far too long, the US has allowed China to manipulate its currency without consequence and the practice has taken a dramatic toll on Pennsylvania's companies and workers," said Casey, who represents the state.

Lawmakers in Washington charge that Beijing's currency policy makes its goods unfairly cheap, pushing US firms out of business and costing jobs in the sour US economy, weighed down by unemployment over nine percent.


China and the United States will open key trade talks on Sunday, with Beijing's currency policy likely to be high on the agenda after US President Barack Obama hit out at the value of the yuan.

Analysts expect Beijing's currency controls, market access restrictions and lax intellectual property rights protection -- major bugbears for US lawmakers -- to top the agenda for the two-day meeting.

China is also likely to push the United States to relax controls on high-tech exports to the Asian country, experts said.

US Commerce Secretary John Bryson and US Trade Representative Ron Kirk will meet with a team led by Chinese Vice Premier Wang Qishan in China's southwestern city of Chengdu for the annual US-China Joint Commission on Commerce and Trade (JCCT).

The atmosphere at the annual talks is expected to be frosty after Obama said last weekend that Beijing had not done enough to allow the yuan to reach a fair market value and called on a now "grown up" China to act more responsibly.

US officials have long accused China of keeping its currency artificially low, fuelling a flow of cheap exports that has helped send the US trade deficit with China to more than $270 billion in 2010.

But the issue has come to the political forefront in recent months ahead of US presidential elections in November next year.

Last month the US Senate passed legislation that would punish China for alleged currency manipulation, raising hackles in Beijing, where state media warned it could spark a trade war between the two countries.

And on Thursday, Democratic US Senator Bob Casey said he had delivered the message that the US would not tolerate what he called China's "unfair trade practices" in a meeting with the head of the Asian giant's vast sovereign wealth fund.

"I think it is going to be hard for the US side not to bring up the renminbi," said Alistair Thornton, an analyst at IHS Global Insight in Beijing, using the official name for the Chinese currency.

Given the turbulence in the US economy and growing frustration among lawmakers on both sides of the political aisle, Obama will "need that issue to be brought up at an event like this," Thornton said.

Chinese state media reacted angrily to Obama's comments, made after an Asia-Pacific Economic Cooperation summit, accusing him of "scapegoating" Beijing for his country's economic woes and using the issue to attract votes.

Mark Williams, chief Asia economist at London-based research house Capital Economics, said the JCCT meeting would be "chillier" than usual due to the US adopting "a more combative line against China's trade and currency policy".

In the past three years, Chinese mobile network equipment giant Huawei has been stymied in two attempts to buy US technology companies.

It was also blocked for national security reasons from selling equipment to top US mobile phone provider Sprint Nextel.

And on Thursday a key US House of Representatives committee said it was investigating the national security threat posed by Chinese-owned telecommunications firms operating in US markets.

China is likely to use the talks to demand greater access to US markets and for Washington to relax controls on high-tech exports, said Patrick Chovanec, an economics professor at Beijing's Tsinghua University.

"There's a perception in China that the US is hostile towards Chinese investment," Chovanec told AFP.

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Japan calls on German 'central role' in euro 'firewall'
Tokyo (AFP) Nov 18, 2011 - Japan called on Germany on Friday to step up and help plug the widening hole in Europe's finances, saying Berlin should play a leading role in creating a debt "firewall".

Finance Minister Jun Azumi said the continent's largest economy needed to do more if Europe was to get out of the downward spiral of debt that is threatening to tip the global economy into recession.

"It is important for Germany to (play) a central role in creating a firm funding scheme that we can refer to as a firewall," Azumi told a news conference, Dow Jones newswires reported.

"I think it is time for Germany to work particularly hard," Azumi said, adding the need to prevent a worsening of the situation in Italy and Spain was becoming "urgent".

Azumi's comments come after European deal brokers began travelling the globe looking for cash to boost the coffers of a bailout fund to help countries struggling under piles of sovereign debt.

The continent's leaders have agreed to a massive boost to the European Financial Stability Facility (EFSF), but shied away from putting in their own money, instead agreeing to "leverage" its capacity from 440 billion to one trillion euros, via a debt insurance scheme.

The head of the fund, Klaus Regling, received a distinctly non-committal response during a cap-in-hand visit to China, where he was asking Beijing to spend some of its $3.2 trillion of foreign reserves on the venture.

At the G20 in Cannes, Chinese President Hu Jintao told his French counterpart Nicolas Sarkozy that Europe had primary responsibility for resolving the debt crisis.

Beijing has said it could provide up to $100 billion in support for the eurozone, but says there are strings attached; it wants certainty that the EFSF package will work and wants to know what sort of guarantees would be offered if the bailout fails.

Azumi's comments echo statements from his boss, Prime Minister Yoshihiko Noda, during the APEC meeting in Hawaii at the weekend.

Noda said Japan, the world's third-largest economy, was committed to helping the eurozone but stressed the bloc bore the primary responsibility for sorting out its own mess.

"We want Europe to first roll up their sleeves and work on this. I believe this is the very first step to bring confidence to the marketplace," Noda told a news conference in Honolulu.

"This crisis is a matter that will have bearing for the world as a whole," Noda said. "If the proper stance is demonstrated, then we will make our appropriate contributions."

Japan was initially buying 20 percent of the debt issued by the EFSF, but the figure has recently decreased to about 10 percent.

Japan also has a mounting public debt and faces major challenges as it rebuilds from the catastrophic March 11 tsunami.



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