(China Daily)
Updated: 2007-09-29 07:24

It is surely in their own interest for American multinationals to call on US Congress to reject protectionism against China. But this self-interest does not lessen the importance of their argument.

Instead, their move underscores the urgency to curb rising protectionism among some US lawmakers that seriously threatens the interests of China, the United States itself and the world at large.

On September 26, a total of 119 US companies and 35 industry associations signed a letter to urge the US Congress to reject legislation to force China to raise the value of its currency.

Two US Senate committees have already approved different bills on this topic. One will allow tariffs on Chinese imports to increase after a formal finding that the yuan is undervalued. The other tightens the US definition of currency manipulation to make it harder for the Treasury Department to avoid making that finding on China.

These protectionist legislations largely stem from the misguided view of some US lawmakers and manufacturers that China has undervalued its currency to secure a significant price advantage in international trade.

Given the ballooning US trade deficit in recent years, it is tempting for some US politicians to play up to the talk of protectionism that could easily provoke national passions.

In addition, it is also a matter of fact that, while yielding widely shared benefits, free trade in the era of accelerated globalization has imposed extra burdens on local enterprises including some US manufacturers.

Yet, these facts do not justify protectionism that flies in the face of the big picture that tremendous benefits have arisen out of openness in foreign trade and investment.

Any trade barrier erected between the world's two major growth engines will only hurt the global growth prospect against the interest of all.

Both countries have accounted for more than 40 percent of total global economic growth in the past five years, and they are critically important markets for each other.

Despite of the massive trade surplus for China, a close look at its exports will reveal that it is foreign companies, including many US multinationals, that drive the majority of China's exports.

Moreover, the Chinese market is much more open to foreign products than some have assumed.

The rate of increase in US sales to China has been 12 times higher than the growth of American exports to other countries during the same period, according to the US Commerce Department.

Clearly, complementary trade relations between China and the United States have benefited and will continue to benefit both consumers and producers within and beyond the two countries.

(China Daily 09/29/2007 page4)