World Socialist Wesite
Demands for trade war measures against China are mounting in Washington as the April 15 deadline approaches for the US Treasury Department to submit its semi-annual report to Congress on currency matters. The key issue is whether to declare China a “currency manipulator” and thus open the way for retaliatory US penalties.
At a US House Ways and Means Committee hearing last week, economist Fred Bergsten claimed that the Chinese yuan was undervalued by 40 percent against the US dollar, causing large job losses in the US and a burgeoning trade deficit. He called on the Obama administration to brand China a currency manipulator as the first step toward enlisting the support of other powers to strong-arm Beijing, via the International Monetary Fund and the World Trade Organisation, into revaluing its currency.
Bergsten’s heated language is itself a symptom of rising trade war tensions. Just as countries invariably go to war in the name of “peace,” so Bergsten justified US trade penalties US against China as “anti-protectionist”—a response to China’s “blatant form of protectionism” in undervaluing the yuan. Bergsten’s “multilateral” approach, appealing for European support in particular, seeks to ensure “maximum impact” and minimise Beijing’s ability to retaliate against Washington.
Europe, however, is mired in its own currency crisis. Conflict between European governments over an aid package to heavily indebted Greece have exposed fissures and called into question the future of the unified currency. The resulting fall in the value of the euro has assisted exporters, making European backing for any US push against China less likely. EU trade commissioner Karel De Gucht told the Financial Times: “At this moment, it is less of a political issue in Europe.”
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