sharon sanders
Editor-in-Chief & President
Bridges Weekly Trade News Digest ? Volume 12 ? Number 42 ? 10th December 2008
US, China Work Together to Aid Global Trade
The US and China will provide US$ 20 billion in loans to finance trade in a coordinated effort to help ease the economic crisis. The agreement was made with developing countries in mind, and ?to contain and curb the spread of the financial contagion and avoid a global recession,? according to Chinese Vice Premier Wang Qishan.
The plan came from the fifth round of the Strategic Economic Dialogue between the US and China, which have held biannual meetings since 2006. This meeting was the final economic talk between the two before the inauguration of US president-elect Barack Obama, and the last time that Henry Paulson, a Chinese favourite, represented the US as Treasury Secretary.
?At this time of unpredictability in our world, high-level engagement with China must be a constant,? said Max Baucus, chairman of the US Senate Finance Committee, in an appeal to Obama to continue the talks.
?A better dialogue will be one that addresses agriculture trade problems, like China?s beef ban, as well as goods and services trade,? Baucus added.
Chinese economic stimulus plans further incorporated a provision that would temporarily permit local arms of foreign banks to receive loans from affiliates abroad in order to increase their cash on hand. And both nations reiterated promises to resist protectionism.
The meeting also established seven accords to promote cooperation on projects to promote energy and environmental conservation. The two nations are the world?s biggest polluters.
China topped Japan as the largest foreign holder of US bonds in September, and the current crisis has only served to underscore the close economic connection between the nations.
?The ground has shifted on both sides of the Pacific and it has become more important than ever for these two economies to get their bilateral relationship strait,? said Eswar Prasad of the Brookings institution.
But though both sides praised the accomplishments of the meeting, there were many criticisms as well, often stemming from the current financial crisis.
Paulson urged China to let the yuan appreciate-not a surprising request considering the widespread criticism that Beijing has been purposefully devaluing its currency. But China may face obstacles in achieving this goal. Many exporters in China may blame Beijing for weaker business sales if they allow the yuan to strengthen, according to Paulson.
But Beijing had a few requests of its own. China?s central bank governor, Zhou Xiaochuan, said that US financial excesses were to blame for the current financial crisis, and Wang said that the US should work to stabilise its own economic problems, including excessive consumption and debt. Analysts say that such comments reflect China?s growing influence and assertiveness in the economic relationship between the two giants.
According to Donald Straszheim of Straszheim Global Advisors, the agreements were ?probably really just a favour [from the Chinese] to secretary Paulson? to give him something that he?s accomplished near the end of his term. To expect any real substantive breakthrough at a time like this, when it?s Bush officials on the way out rather than Obama officials on the way in, is unrealistic.?
Indeed, Zhou wasn?t even in town for the meeting. Instead, he opted to meet with Timothy Geitner, the Obama administration?s pick for Treasury Secretary.
ICTSD reporting; ?US, China Promise $20 billion to finance trade,? ASSOCIATED PRESS, December 5, 2008; ?A Mixed Ending for Paulson in China,? WALL STREET JOURNAL, December 5, 2008; ?China, US promise $20 billion for trade,? ASSOCIATED PRESS, December 5, 2008; ?China, US deepen Financial Ties, Aid Global Trade,? BLOOMBERG, December 5, 2008; ?China, US, Vow to Work Together to Help Global Economy,? VOICE OF AMERICA, December 5, 2008.
http://ictsd.net/
US, China Work Together to Aid Global Trade
The US and China will provide US$ 20 billion in loans to finance trade in a coordinated effort to help ease the economic crisis. The agreement was made with developing countries in mind, and ?to contain and curb the spread of the financial contagion and avoid a global recession,? according to Chinese Vice Premier Wang Qishan.
The plan came from the fifth round of the Strategic Economic Dialogue between the US and China, which have held biannual meetings since 2006. This meeting was the final economic talk between the two before the inauguration of US president-elect Barack Obama, and the last time that Henry Paulson, a Chinese favourite, represented the US as Treasury Secretary.
?At this time of unpredictability in our world, high-level engagement with China must be a constant,? said Max Baucus, chairman of the US Senate Finance Committee, in an appeal to Obama to continue the talks.
?A better dialogue will be one that addresses agriculture trade problems, like China?s beef ban, as well as goods and services trade,? Baucus added.
Chinese economic stimulus plans further incorporated a provision that would temporarily permit local arms of foreign banks to receive loans from affiliates abroad in order to increase their cash on hand. And both nations reiterated promises to resist protectionism.
The meeting also established seven accords to promote cooperation on projects to promote energy and environmental conservation. The two nations are the world?s biggest polluters.
China topped Japan as the largest foreign holder of US bonds in September, and the current crisis has only served to underscore the close economic connection between the nations.
?The ground has shifted on both sides of the Pacific and it has become more important than ever for these two economies to get their bilateral relationship strait,? said Eswar Prasad of the Brookings institution.
But though both sides praised the accomplishments of the meeting, there were many criticisms as well, often stemming from the current financial crisis.
Paulson urged China to let the yuan appreciate-not a surprising request considering the widespread criticism that Beijing has been purposefully devaluing its currency. But China may face obstacles in achieving this goal. Many exporters in China may blame Beijing for weaker business sales if they allow the yuan to strengthen, according to Paulson.
But Beijing had a few requests of its own. China?s central bank governor, Zhou Xiaochuan, said that US financial excesses were to blame for the current financial crisis, and Wang said that the US should work to stabilise its own economic problems, including excessive consumption and debt. Analysts say that such comments reflect China?s growing influence and assertiveness in the economic relationship between the two giants.
According to Donald Straszheim of Straszheim Global Advisors, the agreements were ?probably really just a favour [from the Chinese] to secretary Paulson? to give him something that he?s accomplished near the end of his term. To expect any real substantive breakthrough at a time like this, when it?s Bush officials on the way out rather than Obama officials on the way in, is unrealistic.?
Indeed, Zhou wasn?t even in town for the meeting. Instead, he opted to meet with Timothy Geitner, the Obama administration?s pick for Treasury Secretary.
ICTSD reporting; ?US, China Promise $20 billion to finance trade,? ASSOCIATED PRESS, December 5, 2008; ?A Mixed Ending for Paulson in China,? WALL STREET JOURNAL, December 5, 2008; ?China, US promise $20 billion for trade,? ASSOCIATED PRESS, December 5, 2008; ?China, US deepen Financial Ties, Aid Global Trade,? BLOOMBERG, December 5, 2008; ?China, US, Vow to Work Together to Help Global Economy,? VOICE OF AMERICA, December 5, 2008.
http://ictsd.net/