Question of US-China Trade War Looms as Policy Debate Intensifies

Oct 26, 2010, 12:17 ET from The Journal of Commerce

NEWARK, N.J., Oct. 26 /PRNewswire-USNewswire/ -- Despite fierce words flying across the Pacific Ocean and a mounting U.S. trade deficit with China, a full-fledged trade war that would disrupt one of the world's busiest shipping lanes is unlikely, experts tell The Journal of Commerce. In a Special Report released this week, the JOC examines the deteriorating relationship between the United States and China, impending legislation and the multinational reach of battle lines.

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August's record $28 million U.S.-China trade deficit brings the year's total for the first eight months to $173.4 billion. Between 2000 and 2009, U.S. exports to China increased from $16.2 billion to $69.5 billion; imports increased from $100.1 billion to $296.4 billion. Without a tactical shift in pressuring China for currency devaluation, outsourcing will only worsen the U.S.'s already skyrocketing unemployment rates. Those pressing for a market-driven yuan believe it would strengthen U.S. export opportunities and increase the ability to compete with low-priced Chinese imports.

Bipartisan support -- in both the House and the Senate -- for punitive tariff legislation could engender a strong blow, but experts maintain that fears of backlash retaliation leading to a full-blown trade war between China and the U.S. are unfounded.

A trade war is "always possible, but it's in the overwhelming interest of both sides not to let that happen," said Steve Orlins, president of the National Committee on United States-China Relations.  

The Journal of Commerce report provides in-depth analysis of the reality behind recent threats and sharp accusations, dissent between trade organizations and Washington and the potential for multilateral pressure at the upcoming Asia Pacific Economic Cooperation Summit in Yokohama, G-20 summit in Seoul and World Shipping (China) Summit in Guangzhou.

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SOURCE The Journal of Commerce