US likely to label China 'currency manipulator'

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As the mid-term election campaign looms, the Obama administration could "easily make China a scapegoat by blaming the country for their own problems," Huo said.

Schwab said the two countries should try to find a solution to the problems.

"The China-US relationship is arguably the most important bilateral one worldwide and it (the US) is in danger of shooting itself in the foot (by using protectionism)."

Huo agreed. "The US will have to take China's response into account," he said.

Minister of Commerce Chen Deming said on Sunday that China "would respond if this (the labeling threat) means litigation" under the framework of the World Trade Organization.

China's trade surplus, more than 70 percent of which is with the US, has been declining since October. Premier Wen Jiabao has said China will probably record a deficit of $8 billion in March.

China will make all efforts to import more from the US to balance trade, Wen said on Monday.

"The remarks may make the US reconsider its tough stance against China on the currency issue," said Huo.

It usually takes at least nine months for the WTO to draft a penalty report if the US filed appeal against China on the currency issue, and there have been few precedents.

Zhou Shijian, senior professor at the China-US Relations Research Center affiliated to Tsinghua University, also believes China will not be declared a currency manipulator.

"The US dare not challenge China by labeling it a manipulator. It will hurt both. It is also stupid of them to do so as China is a large consumer market," he said.

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