China panel urges punitive action

Emad Mekay

China’s growing political, military and economic strength poses a serious threat to US national security and its economic and technological leadership, an influential Congressional group argues in a report. The US-China Economic and Security Review Commission (USCC), an advisory group to the US Congress on relations with China, urged the US to rein in China’s growing influence and “implement policies that provide course corrections” towards the Asian nation. Established in October 2000, the USCC has 12 members whose duties include submitting an annual report on the national security implications of the US economic relationship with China. The commission’s 2005 report faults China on a number of bilateral issues, including alleged manipulation of its currency, violations of intellectual property rights and subsidies to Chinese industries, as well as technology transfers.

“The Commission’s greatest concern is that the US has not developed a fundamental assessment of how American national interests are affected by our relationship with China,” said C Richard D’Amato, president of the bipartisan commission. The group, which gained prominence when it stirred Congressional opposition to a bid by a Chinese oil company to buy a US firm earlier this summer, said it detected a number of worrying trends in the current relationship between the two countries.

On the trade front, it is said that US imports from China outpaced US exports to China by more than five to one, which the USCC saw as a threat to US workers. This has lead to bilateral goods trade deficit that reached $162 billion in 2004, a 31 per cent increase over the previous year. The trade deficit between the two nations is expected to exceed $200 billion this year.

The commission said that US firms continue to face market access barriers in China and unfair trade practices in third-country markets. The group urged Congress to take punitive action and protectionist measures, including filing a complaint with the WTO about China’s exchange rate. It also said that Congress should consider imposing an immediate, across-the-board tariff on Chinese imports, a most worrying step for China.

A statement posted on China’s Commerce Ministry website said that such calls for protectionism in the US, could cause enormous uncertainties for China’s exports in the future. President Bush will visit China next week, and has said that he will raise the currency issue with Chinese officials.

The commission has been critical of China since its creation in 2000. It said that China was increasing its global reach in part to obtain access to energy resources and raw materials. Research by independent groups has shown that China’s demand for oil resources, needed to fuel its economic growth, is rapidly increasing. Currently, roughly 40 per cent of all new world oil demand is said to stem from China’s rising energy needs. This has triggered fears in Washington that China is on course to compete with the US and other oil-importing nations for global supplies.

The Commission goes so far as to call on Congress to encourage the administration to freeze the assets of Chinese firms involved in weapons of mass destruction or missile-related proliferation, and Chinese companies or institutions that may be assisting or financing such efforts.