Paulson: Protectionist laws aimed at China a mistake

(China Daily/Agencies)
Updated: 2007-08-09 08:54

US Treasury Secretary Henry Paulson has warned US lawmakers against blaming the loss of jobs at home on global competition and using it as a pretext to pass protectionist trade laws aimed at China.

Paulson, who returned to the US after a four-day visit to China late last week, joined Senate Finance Committee Chairman Max Baucus in his home state of Montana on Tuesday to discuss the importance of open market and free trade to encourage competition - an area the two agree on.

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Baucus, however, rejected Paulson's advice that the US stick to a strategy of negotiation and dialogue to persuade China to revaluate its currency. Baucus said a firmer hand was needed to "deal with China".

The two officials acknowledged that though they share the idea of a more flexible yuan, they disagree on the best way to achieve it.

"I feel quite strongly that the right way to deal with a sovereign nation like China on a currency issue is through negotiation," Paulson said.

The Treasury secretary decried what he called an increasing trend of protectionist sentiment in the US and elsewhere.

"This increase in protectionism is a worrying trend," Paulson said at the jobs forum in Montana. A rapidly changing economy will cause some job losses and dislocations, but that in turn can open ways for new jobs in other sectors.

Director of the Institute of American Studies of China Institute of Contemporary International Relations Yuan Peng said it is unfair to press China to revaluate the yuan further.

"The problem is that such a move will not help solve the problem. It will only increase the cost for American consumers," he said.

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