US-China Trade in the News: Trade, Economics, and the G20 Meeting 2-22-11 Update

Last weekend leaders from 20 of the world’s largest and most powerful economies (the Group of Twenty, or G20) met in Paris, France.  They tackled topics from the global recovery to China’s currency (read the full communiqué here).  Read on for news highlights and commentary from the G20 Paris meeting.

In other news, the debate over the costs and benefits of US-China trade rages on (read about each side below, or to consider a world without trade, see here).  China’s trade surplus fell dramatically in January, though the drop may be more reflective of the import boom typical in the run-up to Chinese New Year and subsequent drop-off in economic activity.  And, by another measure than the one we reported last fall, China is now the world’s second-largest economy.

All this, and more, in this week’s US-China Trade in the News: Trade, Economics, and the G20 Meeting update.


G20 Meeting

US-China Trade

China Economy


G20 Meeting

In the News – G-20 Measures Lack of Progress
Wall Street Journal, Feb 22

“Neither China's exchange rate nor its current-account surplus are moving in the right direction. The Group of 20 has proven itself unable to do anything about this. The G-20 did end its latest meeting with an agreement on how to measure the imbalances that threaten the global economy. In theory, this is a first step toward developing a consensus on the…” Read more 

In the News – Conflicting Agendas Doom Summits
Wall Street Journal, Feb 21

“Last week's effort of the G-20 to bring some sense to the world currency and trading systems reflected a kind of charming persistence. No matter how many meetings fail to do more than set the stage for the next meeting by avoiding a communiqué that says, "We have failed to reach agreement," the world's finance ministers, central bankers, heads of state and of government, and assorted hangers-on—some 90 in all—greet, meet, eat and retreat to their respective homes.”  Read more

In the News – Can the G-20 Solve the World’s Economic Problems?
Time, Feb 21

“Once again, the industrious finance ministers of the G-20 met to solve the world's economic problems, this time in Paris, and after hours of haggling and arm-twisting over the weekend, ended up with something that looks like an agreement on one of the biggest challenges facing the global economy today: giant imbalances. There is almost full consensus among economists that global imbalances – huge external surpluses in countries like China and Germany, and huge deficits in the U.S. – were at the root of the global economic crisis. Such imbalances are a sign of structural problems within economies, which, if not addressed, can make the global economy more vulnerable to crises. For example, China needs to stimulate domestic demand to reduce its dependence on investment and exports; the U.S. needs to increase its savings rate to reduce its dependence on debt-driven consumption. Finding ways to bringing the world into better balance has been one the key objectives of the G-20 for the past two years.”  Read more

In the News – China Arms-twists G-20 on ‘Economic Imbalance’ Resolution
International Business Times, Feb 21

“China threw its weight around at G-20 negotiations to exclude from the final communiqué references to 'foreign exchange reserves' and 'fiscal deficit' as possible causes of global economic imbalances.  Though many G-20 members wanted to precisely mention indicators used to determine global imbalances, China put up a dogged resistance, resulting in an ambiguously-worded compromise resolution.”  Read more

Analysis – G20 Keeps China Onboard but Tough Talks Lie Ahead
Reuters, Feb 20

“A hard-fought compromise saved a weekend G20 meeting from failure by winning Chinese backing for a set of indicators on economic imbalances, but the divided group faces a tougher task agreeing on how to use the list.”  Read more

In the News – G-20 Overcomes China Opposition to Agree on Yardsticks to Gauge Imbalances
Bloomberg, Feb 20

“Group of 20 finance chiefs overcame Chinese opposition to start crafting an early warning system to detect when economic fault lines are opening that may imperil global growth.  Seeking to smooth lopsided trade and investment flows which helped plunge the world into a credit crisis and recession, the G-20’s finance ministers and central bankers concluded talks in Paris on Feb. 20 by listing the yardsticks they will monitor to see whether imbalances are forming. Among them: budget deficit levels, the external imbalance and private savings rates.”  Read more

In the News – G-20 Deal Reached, but Outcome Open to Interpretation
Wall Street Journal, Feb 19

“Negotiators from the world's leading economies haggled all night over seemingly technical details regarding how to measure global economic imbalances. They eventually produced a 53-word sentence intended to appease all sides—and open to interpretation by all sides.  ‘It means what it means what it means, just like a rose is a rose is a rose,’ Christine Lagarde, France's finance minister, told reporters after emerging from the Group of 20 talks.  The agony and near collapse of negotiations—as of noon on Saturday it appeared China's objections had led most sides to throw up their hands—illustrates how difficult and unwieldy the G-20” ...  Read more

In the News – G-20 Reach Compromise Deal on Imbalances
Bloomberg Balances, Feb 19

“The world's dominant economies on Saturday took a small step toward smoothing out the global trade and currency imbalances at the root of the global financial crisis, overcoming Chinese objections and setting the stage for even tougher negotiations in the months ahead.”  Read more

In the News – As G-20 Leaders Set Deal, Geithner Criticizes China
The New York Times, Feb 19

“Treasury Secretary Timothy F. Geithner took direct aim at China on Saturday at a meeting of the world’s most powerful economies, saying that its currency was still “substantially undervalued” and that recent steps taken by Beijing to adjust its value were too small.  Meeting here over the weekend, financial leaders from the Group of 20 agreed on a set of guidelines to identify when economic and financial developments in some countries would create problems for the rest of the world.” Read more

Commentary –All Eyes on Paris and the G-20
IMF direct,
Feb 18
“G-20 Finance Ministers and Central Bank Governors gather in Paris for their first ministerial level meeting of France’s G-20 presidency at a critical juncture–a critical juncture for the global economy, with tensions and risks emerging that require strong policy responses, and a critical juncture for ensuring actions on international policy cooperation and reform.” Read more

What They’re Saying – G20 Leaders Voice Worry on Trade
Ben Bernanke and other leaders at G20 summit in Paris, Feb 18 and 19

“PARIS — With the world’s economies moving at two different speeds, fast-growing developing countries are luring money at a pace that, if left unchecked, could set the stage for future problems, the Federal Reserve chairman, Ben S. Bernanke, said Friday.”  Read more
Also see:
China calls for closer G20 cooperation, stable currency rates
Also see:
G20 step nearer to accord on ways to measure imbalances

In the News – Global imbalances a most vital finance topic at G20 Paris meeting
G20 at Paris, Feb 18 and 19

“French President Nicolas Sarkozy said the advancement of the international monetary system reform has manifested the trend of the new global economic growth and is aimed precisely to reduce the excessive dependence on the US dollar and enable the currencies of emerging economies to pay a more important role.”  Read more

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US-China Trade

Commentary – China-U.S. Trade in the ‘Year of the Rabbit’
Global Atlanta, Feb 21

“In welcoming the Chinese New Year, Donald Tong, commissioner of Hong Kong to the U.S., said during a ceremony at the Fernbank Museum of Natural History on Feb. 14, that the “Year of the Rabbit” is a good omen, and he hoped that it would result in improved Chinese-American trade relations.”  Read more

Commentary – The End of the Renminbi Regime
The Globalist, Feb 21

“China could try and encourage other countries to hold more renminbi assets, since it has already replaced the United States as the biggest trading nation in a group of countries that now accounts for nearly half of its trade: Japan, Russia, Malaysia, Hong Kong, Singapore, Australia, Taiwan, the Philippines, South Korea and Indonesia.” (Excerpted from an upcoming book “Uprising: Will Emerging Markets Shape or Shake the World Economy? By George Magnus).  Read more

Commentary – Is It Time for a Trade War with China?
North County Public Radio, Feb 21

“The last couple of weeks, the United States is doing something we rarely do:  we're thinking in more or less practical terms about the future of our democracy, boiling our values and our needs down into numbers on a balance sheet.  President Barack Obama has laid out his budget and it's drawing serious fire.  Republicans have countered with their own spending proposals, which have also been roundly panned.” Read more

Commentary – In a Trade War with China, We all Would Lose
Kansas City Star, Feb 20

“Over the last several years, many in Congress have become frustrated with the large trade deficit with China. Some have threatened punitive tariffs if Beijing doesn’t further open its markets or allow its currency to rise, making U.S. goods more attractive.”  Read more

In The News-MOFCOM studies import tax cuts
Global Times, Feb 18

“The Ministry of Commerce has asked for opinions from other ministries about the idea of cutting import taxes on a range of goods, two sources said Thursday.” Read more

In The News-China calls for more US transparency
Global Times, Feb 18

“China hopes the United States will make the approval process for Chinese enterprises seeking to invest in the US more transparent, the spokesman for the Ministry of Commerce (MOFCOM) said Thursday.” Read more

What They’re Saying – Global Imbalances: Links to Economic and Financial Stability
Fed Chairman Ben Bernanke at the Banque de France Financial Stability Review Launch Event, Paris, Feb 18, 2011

“Although these issues are now generally discussed in the context of emerging market economies, the United States--the recipient of the largest capital inflows in the world--has also faced challenges coping with capital inflows. Notably, the failures of the U.S. financial system in allocating strong flows of capital, both domestic and foreign, helped precipitate the recent financial crisis and global recession.”  Read more
Also see:
Don’t Blame Easy Money for Capital Swings, Bernanke Says

In The News- WTO: Chinese commodity export restrictions are unfair
China Economic Review, Feb 18

“The WTO is to issue a preliminary report on Friday that concludes China has no right to impose export restrictions on nine raw materials, the Wall Street Journal reported.” Read more

Commentary – The China Threat
Foreign Policy, March/April 2011
Letter to Editor
“Joseph S. Nye Jr.'s optimism is laudable ("China's Rise Doesn't Mean War…" Jan/Feb 2011). That said, John Mearsheimer was right to say that there are few, if any, examples of preeminent global powers like the United States going quietly into the night. That is particularly true when an ascending power, such as China, advances diplomatic, political, and economic values antithetical to those that have informed the status quo global architecture. It is nonsense to suggest that "America's peaceful overtaking of Britain at the end of the 19th century" -- in which one democratic, Christian, English-speaking, Anglo-Saxon country stood aside for another -- provides a blueprint for China's rise.” Read more

Commentary – Unconventional Wisdom: China’s Rise Doesn’t Mean War
Foreign Policy Special Report, January/Feb 2011

“China’s Rise Doesn’t Mean War “Thucydides famously attributed the Peloponnesian War to the rise in power of Athens and the fear it created in Sparta. A century ago, Germany's rise and the fear it created in Britain helped cause World War I. Now, it's become a new conventional wisdom in some circles that China's rise and the fear it is creating in the United States -- where recent polls show 60 percent believe the country is in decline -- could doom the 21st century to a similar fate. As scholar John Mearsheimer has put it, China's rise cannot be peaceful.”  Read more

Commentary – Unconventional Wisdom: And China isn’t Beating the U.S.
Foreign Policy Special Report, January/Feb 2011

“China is a great power in every sense of the word. It is the most populous country in the world. The Middle Kingdom has weathered the Great Recession better than the West. It is developing a blue-water navy to rival the United States in the Pacific. In 2010, China surpassed Japan as the world's second-largest economy. For many Americans, however, this is not enough. Politicians, commentators, and the public believe China has already supplanted the United States to achieve primacy in world politics. This is not only wrong -- it is dangerously wrong.” Read more

In The News- Foreign investment in China rises 23.4% in January
China Economic Review, Feb 17

“Foreign direct investment in China rose 23.4% year-on-year to US$10 billion in January, Bloomberg reported.” Read more 

What They’re Saying – Political Counselor Zhou Jingxing Speaking at the Foreign Service Institute Feb 17

“Mr. Zhou Jingxing, Political Counselor of the Chinese Embassy, was invited to speak at the U.S. Foreign Service Institute (FSI) on Feb 15. He briefed his audience on China's foreign policy and China-U.S. relations, and answered questions on international and regional issues.” Read more

Commentary- Taking over from the US is not China's goal
Global Times
, Feb 16
“British bookmaker Ladbrokes rolled out an offer Monday, the day Japan confirmed that China had overtaken it as the world's second largest economy. Ladbrokes offered odds of 6/4, betting that China would become the world's biggest economy by 2020. This might lead to the feeling that Chinese and US are locked in a race to be the GDP top dog.” Read more

In the News – Foreign holdings of U.S. long-term securities rise in December 2010
Xinhua, Feb 16

“Total foreign holdings of U.S. long-term securities in December 2010 reached 4.37 trillion dollars, up 25.8 billion dollars, or 0.6 percent from the previous month, but China trimmed its holdings for the second straight month, the U.S. Treasury Department reported Tuesday.”  Read more

In The News-Trade surplus shrinks sharply
Global Times, Feb 15

“The nation's trade surplus fell sharper than expected in January after imports surges, according to figures released Monday by the General Administration of Customs.” Read more

In the News – 9-month low ushers in falling surplus era
China Daily, Feb 15
“Economists said the trade situation is challenging as the uncertain economic outlook for major economies, including the United States, Japan and the European Union, poses difficulties for China's exports.”  Read more

In The News- China trade surplus falls 53.5% in January
China Economic Review, Feb 15

“China's trade surplus fell 53.5% year-on-year in January to US$6.45 billion, state media reported. This narrowing came on the back of 51% import growth and 37.7% export growth, compared with import growth of 25.6% and export growth of 17.9% in December.” Read more

In the News – Import price of soybeans rises
China Daily, Feb 15

“From Sept 1 to Feb 3, US sales to China, the biggest importer, rose 10 percent from a year earlier to 23.821 million tons, according to Bloomberg.”  Read more

In the News – China's trade glut drops 54%
Shanghai Daily, Feb 15

“The Yuan ended at 6.59 per dollar yesterday and has appreciated more than 3.5 percent since last June when China announced it was relaxing its control over the exchange regime.”  Read more

In the News – China’s Trade Surplus Shrinks as Nation Imports More
The New York Times, Feb 14

“The United States and some other nations contend that China holds down the Renminbi’s value to bolster exports and limit imports. Although the trade surplus has shrunk as a percentage of the nation’s gross domestic product for three years in a row, the surplus remains large.”  Read more

In the News – Trade disputes with US
Global Times, Feb 14

“The US said Friday it had taken two trade disputes with China over US steel imports and electronic payment services to the WTO. One case addresses imposition of duties on imports of grain-oriented flat-rolled electrical steel from the US, the statement said.”  Read more

In the News – China becomes biggest importer of US agricultural products
People’s Daily Online, Feb 14

“For the first time, China emerged as the top market for U.S. agricultural exports, according to statistics released by the U.S. Department of Agriculture on Feb. 11.”  Read more

In the News – DCM and Minister Deng Hongbo Hosts Reception for US Federal and Local Government Staff Feb 14

“On the evening of 10 Feb 2011, DCM and Minister Deng Hongbo hosted a reception for federal and local government staff attending the State Department Dialogue on "Expanding Relationships in China for State and Local Governments". US Special Representative for Global Intergovernmental Affairs Reta Jo Lewis of the State Department was present.” Read more

In The News- Trade disputes with US
Global Times, Feb 14

“The US said Friday it had taken two trade disputes with China over US steel imports and electronic payment services to the WTO. One case addresses imposition of duties on imports of grain-oriented flat-rolled electrical steel from the US, the statement said. The other case challenges China's allegedly discriminatory treatment of US suppliers of electronic payment services.” Read more

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China Economy

In The News-China to improve regulation of total social financing: central bank
Xinhua, Feb 18

“China is looking to establish an effective regulatory system for total social financing, an official with the country's central bank said Thursday.” Read more

In The News- China's central bank launches new credit supply measure
China Economic Review, Feb 18

“The People’s Bank of China (PBoC) has unveiled a new measure to better gauge the total supply of credit to the country's economy, Dow Jones reported.” Read more

In The News-Nation sees only ant hill of hot money
Global Times, Feb 18

“The amount of hot money entering China in recent years is more an ant hill than a mountain, the foreign exchange regulator said Thursday, countering the popular view that it faces a torrent of speculative inflows.” Read more

In The News- Chinese regulator plays down 'hot money' levels
China Economic Review, Feb 18

“The level of "hot money" coming into China did not increase significantly in 2010, according to the State Administration of Foreign Exchange (SAFE), the Financial Times reported.” Read more

In The News- ICBC: Chinese gold demand growing rapidly
China Economic Review, Feb 17

“Demand for gold in China is growing at an "explosive" rate, according to Industrial and Commercial Bank of China (601398.SH, 1398.HK).” Read more

In The News- China's growth underpins global recovery
China Economic Review, Feb 17

“The global economic recovery and domestic demand in China are both gaining momentum.  China's exports grew by almost 38% year-on-year in January, while growth of import cargo volume at US ports is expected to top 11% this month.” Read more

In The News- China continues to sell off US Treasurys
China Economic Review, Feb 16

“China was a net seller of US Treasurys for the second month running in December, although it remains the largest foreign holder of US debt, Dow Jones reported.” Read more

In The News- China bank lending lower than expected
China Economic Review, Feb 16

“Chinese bank lending fell well below forecasts in January as restrictions on credit issuance and money supply started to yield an impact, Reuters reported.” Read more

In the News – China reduces US debt holdings in December
People’s Daily Online, Feb 16

“China, the biggest buyer of US government debts, reduced its holdings in December for the second straight month, the Treasury Department said yesterday.”  Read more
Also see:
China unloads more US debt holdings

In The News-China tops Japan in GDP
Global Times, Feb 15

“Shoppers walk outside a busy retail mall in Beijing Monday. China overtook Japan as the world's second-biggest economy in 2010, with data showing a contraction in Japan's economy in the last quarter due to weak consumer spending.” Read more

Commentary - China No. 2 in the world but it's not all good news
Shanghai Daily, Feb 15

“Some analysts, including those at the World Bank and Goldman Sachs, predict that China could overtake the US as the No. 1 economy by 2025.”  Read more

In The News- China aiming at balanced development
China Economic Review, Feb 15

“The 12th Five-Year Plan that China is implementing starting next month has a very different focus than those in the past, which is aiming at a more balanced development of the country by restructuring its industries and regional economy.” Read more

Commentary –Doug Bandow: What China's Capitalism Means
The Washington Times
, Feb 14
“Three decades ago, the Chinese giant awoke from its Maoist nightmare. One-quarter of the world's population joined the world. While today Western nations focus on Beijing's growing influence on military and political affairs, Karl Gerth of Oxford University addresses the impact of China's consumers.”Read more

In The News-China's foreign trade jumps 44% in Jan, trade surplus shrinks by half
Xinhua, Feb 14

“China's foreign trade surged 44 percent year on year in January boosted by busy shipments ahead of the nation's traditional Spring Festival, while trade surplus shrank by half, the customs agency said on Monday.” Read more

In the News – China Replaced Japan in 2010 as No. 2 Economy
The New York Times, Feb 13

“The country had the world’s second-largest economy after the United States for much of the last four decades. In the 1980s, its rapid growth even led to talk of the Japanese economy’s overtaking that of the United States.”  Read more

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