Trade tensions may increase: economists

Updated: 2012-01-30 07:44

By Fu Jing (China Daily)

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DAVOS, Switzerland - Trade tensions between China and the United States may be exacerbated by the global financial outlook and US election politics, economists said.

"What I worry about are trade tensions between China and the US," Stephen Roach, senior research fellow at Yale University's Jackson Institute for Global Affairs, told China Daily in Davos during the World Economic Forum.

Roach did not elaborate on who was to blame for growing trade tension. But he described China as his "favorite economy" because it has weathered economic challenges without sacrificing the interest of other economies.

"I don't think trade friction between China and other economies will grow, but my worry is about (the frictions between) China and the US," Roach, an expert of the Chinese economy, said. "Trade tensions are going to be a major feature amid the shift in the global environment in the next few years."

Roach said that he was hopeful over another challenge facing China: transforming China's economy from one that focuses on trade and investment to one based on domestic consumption, as indicated in the 12th Five-Year Plan (2011-15). "I am optimistic that China will do it," he said.

At a panel discussion on whether emerging markets can deliver global growth, Li Daokui, policy adviser of China's central bank and director of the Center for China in the World Economy at Tsinghua University, also listed trade tensions between China and the US as a concern.

"We must pay close attention to growing trade tensions between China and the US," said Li, adding that protectionism does not help protect US jobs.

Tension between the US and Iran is also something that should be taken into account, Li said.

"If this situation erupts, global oil prices will surge and the supply could be disrupted. This will have a huge impact on emerging economies, such as China," Li said.

Since the financial crisis in 2007-08, emerging economies such as China, India and Turkey, have become the driving force of global economic growth. China is expecting to achieve about 8 percent growth this year, while advanced economies are close to recession, economists predicted.

"If trade tensions (between China and the US) grow I am afraid this will further dim the already gloomy economic outlook," Li said.

Chinese enterprises have faced growing US trade protectionism.

"We welcome the US government to create a fair environment in which its enterprises can compete instead of using punitive measures," said Gao Jifan, president of China's leading solar power equipment producer Trina Solar.

Gao was referring to the US launching anti-dumping investigations against Chinese solar panel manufacturers.

US President Barack Obama's State of the Union address, during which he targeted China, was a particular issue of concern for Gao.

"I understand this is election politics," Gao said. "But it is also very clear if the US takes tough measures, jobs in his country will decrease instead of increase."

Gao's company has set up one of its four overseas headquarters in the US.

"So I think it is wrong for the US president to play the China card, especially a card against Chinese enterprises," Gao said.

"If it continues, China suffers, our US clients and employees suffer, and the world economy suffers."

But in a panel discussion in Davos, US Trade Representative Ron Kirk dismissed any possible trade war.

When asked by China Daily what were his grounds, he replied: "The best insurance I will give to China is the $300 billion in trade surplus between China and the US."