Call for joint effort on trade rules
Updated: 2013-03-04 11:22
By Chen Jia in San Francisco (China Daily)
The United States and the European Union should cooperate closely with China in shaping new rules for global trade, a senior Chinese official said at the weekend.
"Coordination and communication of global trade policy should be based on mutual respect and mutual benefits. We expect it to be a win-win situation," Vice-Minister of Finance Zhu Guangyao said on Saturday at a conference on China's macroeconomic forecast in Beijing.
He said such efforts should be jointly handled by the world's major economies in conjunction with the World Trade Organization, as well as governments that took part in the WTO's most recent - but never concluded - round of negotiations in Doha, Qatar.
On Friday, President Barack Obama outlined the US trade policy agenda for 2013, vowing to advance trade negotiations with Asian countries and the EU.
The agenda calls for Obama's administration this year to bring negotiations over the Trans-Pacific Partnership, or TPP, toward "an ambitious conclusion" and launch negotiations with the EU toward a trans-Atlantic trade and investment pact. China is not a party to the talks to set up the TPP, a proposed regional free-trade area.
"TPP negotiators already are working diligently toward the goal put forward by President Obama and fellow TPP leaders in November 2012 - to strive to complete the negotiations this year," the US Trade Representative's Office said in a report on the trade-policy agenda.
While emphasizing regional economic integration with countries in Africa and Asia to expand trade, the White House also pledged to work toward its goal of doubling US exports by the end of 2014.
At the WTO, the US this year will promote trade liberalization, expansion of the Geneva body's Information Technology Agreement, and negotiations on a new International Services Agreement, the USTR report said.
"It is a red alert, and China would pay a huge price if the TPP took the place of the Asia-Pacific Economic Cooperation forum," said Sun Lijian, deputy dean of the school of economics at Shanghai's Fudan University, referring to the region's pre-eminent trading bloc.
Washington aims to play a leading role by promoting the TPP and reshaping international trade rules, because countries left out of the proposed structure could be at a disadvantage, Sun said.
The Finance Ministry's Zhu also warned in his Saturday speech that emerging economies around the world should be aware of possible repercussions of the loose monetary policies of developed countries, particularly the US.
Since the 2008-09 financial crisis, the US central bank, the Federal Reserve, has continued to reduce interest rates to promote growth, with limited success. The Fed is currently engaged in its third round of quantitative easing - essentially printing money to buy up US Treasury bonds and less-desirable assets from commercial banks to promote lending.
China currently benefits from the relatively weak dollar that quantitative easing provides, Federal Reserve Chairman Ben Bernanke said. That could change, Zhu warned, if the policy achieves the desired effect of economic stimulus through heightened consumer demand.
"It is necessary for emerging economies to analyze and keep a close eye on it," the vice-minister said. "It is relatively easier to control currency appreciation than depreciation for policy makers in emerging economies."
Wang Jian, a senior economist for the Federal Reserve Bank of Dallas, speaking on Thursday at a management conference in Beijing, predicted modest growth in the US economy for 2013.
"I anticipate the US economy will increase by 2 percent to 2.5 percent in the first half of the year, and grow by up to 2.5 percent to 3 percent in the latter six months of the year," Wang said. "I also see a decreasing unemployment rate, which might be under 7 percent at the end of this year."
In their latest forecast, issued in mid-February, economists surveyed by the Federal Reserve Bank said US gross domestic product was likely to increase 1.9 percent this year, little changed from the group's 2.0 percent prediction in November.
Xinhua News Agency quoted a senior Chinese central bank official as saying that China is "fully prepared" for a currency war should one arise, though the official cautioned that such an occurrence is "avoidable".
Yi Gang, vice-governor of the People's Bank of China, made the comment on Friday, reflecting concern that the world's major economies could use monetary easing to force down the value of their currencies, making their exports cheaper.
"In terms of both monetary policies and other mechanisms, China will take into full account the quantitative-easing policies implemented by central banks of foreign countries," Yi was quoted by Xinhua as saying.
Yi said a currency war can be avoided if policy makers in developed countries follow the consensus view recently reached at the Group of 20 meeting in Moscow that monetary policy should mainly serve as a tool to stimulate a nation's domestic economy.