Washington, February 19:

Reminiscent of 1980s Japan-bashing, Washington is revving up criticism of China to rectify a burgeoning trade deficit, but its options are limited and any retaliatory actions could backfire, analysts say.

To appease constituents facing job losses in America’s industrial heartlands, US lawmakers have proposed legislation to downgrade trade relations with China and impose punitive tariffs on Chinese goods flooding the US. The Bush administration, in an unprecedented move last week, announced the setting up of a task force that will specifically monitor China’s compliance with its global trade obligations.

They include Beijing’s enforcement of intellectual property rights, freeing up certain domestic industries and fulfilling market-opening commitments — all of which were blamed for fuelling the record US trade deficit with China of more than $200 billion. Another reason cited was alleged Chinese government action to keep its yuan currency artificially weak to boost exports.

Speculation is mounting that the administration is considering branding China a currency manipulator in April, when Chinese president Hu Jintao is scheduled to visit Washington for talks with president George W Bush. The US treasury department is reportedly sounding out investors and experts about how financial markets might react to such a move. Under a 1988 law, the treasury is required to consider twice a year whether countries are pursuing exchange-rate policies ‘for the purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.’ The US is the only country that has taken China to the WTO on a trade dispute since the world’s most populous nation gained entry in the global trade body in 2001. Washington also has filed more antidumping suits against Chinese products than against any other country in the world.

It is not the first time that a competing country has caused economic unease in the US. In the 1980’s, the US was concerned over Japan’s economic success, leading to actions that helped spark a stunning revival of American productivity.

“I think there are some comparisons, actually, and I think it’s instructive for us to look back at the ‘80s and look at where we are,” acknowledged US trade representative Rob Portman, who was then attached to the White House, “There was a concern that we just could not compete and win against Japan, no matter what. Look what’s happened. You had a high technology revolution in this country following that. It was an essential wakeup call. My sense is that’s where we are again, in a sense.”

But when Portman declared in a ‘top-to-bottom review’ of China’s trade practices, Congress was little impressed.