China unexpectedly increased pressure on the United States

China unexpectedly increased pressure on the United States on Sunday in the wake of inflame trade disputes. Beijing took the first step towards the imposition of duties on U.S. exports of automotive products and poultry in relation to the decision by President Obama, taken late on Friday to raise duties on tires from China.
Strong blowback from the Chinese government came after a weekend full of nationalistic vitriol against the U.S. in the Chinese Internet sites. „The United States no shame!“ Wrote one of the postings, and another urges the Chinese government to sell all the huge amount of U.S. government bonds it holds.

Under internal pressure

The impact of this conflict extends far beyond the tires, poultry meat and cars. Both governments face domestic pressure to pursue a tough stance against the defendant for economic affairs. Trade dispute, however, increasing political tensions between the two nations despite their attempts to work together to revive the global economy and to combat common security threats such as Iran’s nuclear ambitions and North Korea.
Obama’s decision to impose duties of up to 35% for Chinese tires is a sign that he still intends to fulfill his promise to the unions for stronger enforcement of trade laws, especially against China, which has become the factory of the world, while United States lost millions of jobs in manufacturing. The trade deficit with China reached a record $ 268 billion in 2008
China initially made quite Template criticized the United States in the dispute over the tires on Saturday. Growing nationalism, however difficult the Chinese authorities in their efforts to zamazhat American criticism. „All kinds of public policy, not just commercial, react more strongly to the opinions on the Internet,“ said Victor Shih of Northwestern University.
Esuar Prasad, former Director of the IMF for China, said that the increasing tensions around trade between the U.S. and China may become difficult to control and to cast a shadow over the meeting of the leaders of the G-20, Pittsburgh 24 and 25 September. A likely influence on Obama’s visit to Beijing in November. „This quarrel about tires and chicken may deteriorate very seriously for a short time,“ said Prasad.
China exported tires for $ 1.3 billion for the U.S. during the first seven months of 2009 and the U.S. are imported automotive products in China for $ 800 million and chicken for $ 376 million as reported by Global Trade Information Services.
For many years, U.S. politicians attributed to its merit, that persist in China through a very symbolic measures against Chinese exports in narrowly defined categories. In the last 5 years the Ministry of Commerce of the United States to limit Chinese imports at a variety of goods – from brass to equipment for oil wells.
During most of the Chinese authorities protested, but did almost nothing, as preferred to preserve the relationship in which the United States buy Chinese goods for $ 4.46 for each U.S. $ 1 product sold in China.
Now that delicate balance is disturbed.
Chinese Commerce Ministry said on Sunday that will explore „some imported automotive products and poultry products originating in the United States“ to assess whether they are subsidized or „scrapped“ in the value of the Chinese market. If you detect or scrapping subsidies, China will have a reason to impose duties on these imports.
The Ministry did not mention the dispute over tire in his statement that characterized the investigation as „based on the laws of our country and the rules of the World Trade Organization.
The timing of the statement, however, (over the weekend, shortly after Washington’s decision on tires) certainly sends a message revenge. The official Xinhua news agency clearly linked its website about the dispute and the Chinese tire investigations. The trade ministry statement published on its website, also hinted at obliquely to the injury which a trade war would inflict, while Western nations and Japan are trying to come out of severe economic crisis. „China wishes to continue its efforts in cooperation with various countries to ensure the most rapid recovery of global economy,“ the statement said.
Sometimes the Chinese government organizes blogs to defend its policy, but this time some posts are openly critical of the government itself, so it is unlikely to be part of organized efforts. „Why our government has bought so much U.S. debt?“ Asks in a posting signed by the „Group of angry young people“. And he continues: „We must get rid of all American investments.“
China has amassed $ 2 trillion. foreign reserves, mostly in U.S. government debt securities and other dollar-denominated assets. Beijing maintains a low value of the yuan makes Chinese goods very cheap in foreign markets. Exports to China grew – he overtook Germany in the first half and is now ahead of global rating of exports. Imports behind him, with the exception of commodities such as iron ore and oil, which is lacking in China.

US sale of bonds?

Fears that China may begin sells U.S. debt or even to delay its purchase were a concern for the Bush administration and now that of Obama. Authorities still looking for a way to respond to trade and currency policy of China.
However, China’s economy relies heavily on exports to the U.S. while the U.S. is much less dependent on exports in the opposite direction. Exports to the U.S. amounted to 6% of the entire economic output of China is 13 times larger as a share of the Chinese economy by doing that exports to China is for the U.S..
Gatri Carroll, spokesman for the Office of the U.S. trade representative, said the United States wanted to avoid a dispute with China and to continue negotiations, but will ensure that all trading decisions of the country conform to WTO rules. Products affected by trade dispute between the U.S. and China are tiny sliver in trade relations between the two giants.

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Kate Bradshar, „New York Times