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Unwise US Export Policy
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It makes little sense for a country to restrict its own exports while claiming to be serious about cutting its trade deficit.


If the United States insists that its increased restriction on high-tech exports to China "strikes the right balance in our complex relations with China", Chinese policymakers may have reason to doubt US motives for pressing for revaluation of the Chinese currency.


The US Commerce Department recently listed 20 separate product groups that will require export licenses. The items include high-powered computers and certain lasers.


Undoubtedly, this move smacks of Cold-War mentality. US officials argue that exports of such items will contribute to China's military modernization.


However, what makes this export control particularly counterproductive is that it comes at a moment when the US is stepping up criticism against China for the two countries' bilateral trade imbalance. Though that trade imbalance is largely a result of accelerated economic globalization, China has been seeking cooperation with the US to reduce their respective external imbalances and thus ease the global imbalance.


As a low-cost manufacturing center in the global supply chain, China is set to gain a huge trade surplus from exports. To balance its trade growth, the country has not only introduced more flexibility into its foreign exchange regime but also raised export tariffs to rein in growth of the trade surplus.


As the world's largest economy, the US can take measures to encourage its consumers to spend less and save more to cut its trade deficit. But so far, the US government and politicians have shied away from taking on this essential but unpopular job.


As a global high-tech leader, the other obvious option for the US to narrow its trade deficit is to expand its share in the global market of high-tech products. The different development levels of China and the US should make them complementary trade partners.


In fact, China is now the fourth largest export market for the US and US exports to China have been growing at a much faster rate over the past two years than its imports from China.


However, by politicizing the bilateral trade ties, the US is running counter to the interests of both sides.


Such a misdirected export curb will not only affect the growing list of US companies that export to China but also undermine bilateral or unilateral efforts the two countries have made to balance their trade relations.


(China Daily June 19, 2007)


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