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Former US trade official: Yuan not to blame for US deficit
( 2003-11-04 09:04) (China Daily)

China's currency exchange rate is not to blame for the United States' bilateral trade imbalance with China, former US Trade Representative Charlene Barshefsky said yesterday in Boao, southern China's Hainan province.

"The yuan may be one of the problems, but not the only problem, and today it is not even the major problem," Barshefsky said when she delivered a luncheon speech at the Boao Forum for Asia.

The tremendous export growth from China to the United States was partly due to US multinational companies which set up workshops in China and re-export to the United States, she said.

One of the evidence is that China's export earnings are helping finance the US federal budget deficit by using dollars to purchase US treasury bills, she said.

It is true that the US economy is facing with some immediate economic challenges and longer-term questions, while the Chinese economy is growing rapidly.

However, "this is not a simple story of Chinese growth at American expense," she added.

And China had taken positive steps last month to cut the export rebate rate from an average of 17 per cent to 13 per cent.

"It is a complex situation between the two sides and China has just played relatively minor role in America's growing imports as well as manufacturing job losses," Barshefsky said.

She urged the two nations to develop a firm bilateral trade relationship, adding that it is very important for Sino-US relations.

In recent months, frictions, focusing on trade and economic issues, between the United States and China, have begun to increase, and new challenge lies ahead for Sino-US economic relations.

But disputes could be solved through dialogue, she said: "If there is a problem, it can be brought to the table and be discussed in a quiet, but more productive way."

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