Chinese Central Banker Tells US To Stop Blaming
China
In an unprecendented move, the deputy governor of the
People's Bank of China, Li Guoru, blames the US for its
worsening and unsustainable trade deficit, which is now
reaching 6% of GDP.
In the interview with the Financial Times, Li said that
the main problem is that the US continues to have exposure
to industries with low value-added such as textiles and
agriculture. Products produced by these industries are
no longer competitive in the globalized market. Li said
that if the US produced more cutting-edge industrial products,
such as aerospace products, China would be willing to
buy more.
The US's largest single export commodity to China is
soybeans.
The official said that the US is too willing to blame
others, when in fact, it should puts its own financial
house in order. In contrast, he said, China never blamed
others for its own economic shortcomings. The US has put
strong pressure on China to revalue the Chinese yuan upwards
against the dollar so that US exports to China are cheaper.
So far, China has refused to undo the peg, which is fixed
at 8.28 yuan to the dollar. China has stressed that it
will only loosen the peg when the Chinese economy and
financial sector meet certain internal milestones, not
when the US wants it to do so.
The fact is that, for the large part, many US products
and services are not competitive in the world marketplace.
Hi-tech products and development have relied on engineers
and researchers from other countries, especially China
and India. However, following the Sept. 11 terrorist attacks,
the numbers of foreign graduate students pursuing further
study in the US has fallen by 30%, while the number going
to Australia, New Zealand, Canada and the UK have gone
up.
At the same time, the US government does not have a trade
and education policy which encourages less-educated workers
to improve their own job skills so that they can go up
the ladder. Currently, the best paying US jobs are in
medicine, legal, and executive positions; most other jobs
are outsourced for manufacture and services in other countries.
The result is a strong US backlash against low-paying
illegal immigrant positions, which take jobs away from
those lower-paying jobs on the US payscale. Essentially,
the US current account is borrowing money from Asian central
banks to maintain a high standard of living which is need
of a correction.
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