Tussling Over Trade

Sitting astride the sleeping Asian monster, Beijing is already beginning to brandish its influence more directly against the U.S.

At the top of the list of recent Sino-American agitations is America’s massive trade deficit with China. Toward the end of 2003, the U.S. estimated that its deficit with China would rise 20 percent to hit $120 billion for the year.

One of the main reasons behind America’s large deficit with China, and a hot topic between Beijing and Washington, is China’s fixed-currency policy.

When the Chinese yuan is fixed at a low level compared to the U.S. dollar, Chinese exporters are given a huge advantage, contributing to lower U.S. exports and hurting American manufacturers.

Washington has responded to China’s fixed currency policy with trade tariffs. “The recent moves are reviving fears of some kind of trade war between the world’s largest consuming nation and one of its largest suppliers” (Christian Science Monitor, Dec. 2, 2003).

As Washington and Beijing continue to bicker over such issues, their relationship will grow more fractious, and the U.S. will be ostracized slowly from the Asian arena.