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A US-China trade war? Not yet.
Recent get-tough moves by the Bush administration are meant to avert a worse crisis – and to ameliorate Congress's concerns about a growing trade gap.
from the April 12, 2007 edition
Page 2 of 3
Preempting an angry Congress
The altered tone toward China is also a preemptive strike.
By demonstrating that his administration is acting on several key tension points with China, Mr. Bush may be able to avoid seeing tough legislation come across his desk this year. Some lawmakers would like to impose trade penalties for alleged currency manipulation, if Beijing is unresponsive to overtures by the US Treasury Department.
"The attempt is to let some air out of the political pressure" in Congress, says Charles McMillion, an economist who tracks China policy at MBG Information Services in Washington.
Political restiveness on China has been growing, however, despite a generally strong US economy with low unemployment.
"I don't think the trade issue is going to go away," Mr. McMillion says. If the economy slows, as some believe it will, "the pressure will only get louder."
American attitudes on globalization can be ambivalent, mindful of both the benefits of falling costs for flat-screen TVs as well as falling employment at Midwest factories.
But in an NBC News/Wall Street Journal poll a month ago, 48 percent of American adults said the nation is "being harmed" by the global economy, versus 25 percent who said the nation was benefiting.
China is the focal point for that concern.
Worries about a soaring gap with China in the trade of manufactured goods helped push a number of Democrats into office as the party retook control of Congress last fall.
The backlash does not, for now, appear strong enough to quickly propel a protectionist agenda. Democrats themselves are divided on trade, with internal jostling now between several camps. But Congress has still sent a message on China.
The business community has added its own fuel to the fire.
Many large corporations are benefiting from operations within China that are very profitable – and have high hopes for China as a key growth market in coming decades. But some businesses have become frustrated in recent months with what they see as a China unresponsive to US trade complaints regarding subsidies, copyright violations, and an undervalued currency.
The National Association of Manufacturers, which represents a panoply of industrial corporations, has welcomed the Bush administration's recent actions.
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