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84 Foreign Aff. 94 (2005)
A Trade War with China

handle is hein.journals/fora84 and id is 650 raw text is: A Trade War with China? Neil C. Hughes THE EAGLE AND THE DRAGON AMERICANS ARE increasingly disturbed by the growing economic clout of China. With Chinese growth rates consistently above nine percent, they accuse it of stealing U.S. jobs, of keeping the yuan undervalued by pegging it to the dollar, of exporting deflation by selling its products abroad at unfair prices, of violating the rights of its workers to keep labor costs low, and of failing to meet its commitments to the World Trade Organization (WTO). Most of these charges have little merit. But the misunderstandings behind them have opened the way to a trade war between the United States and China-one that, if it escalates, could do considerable damage to both sides. China is not stealing U.S. jobs or engaging in unfair trade practices to undercut U.S. economic might and export its way to global power. In fact, almost 6o percent of Chinese exports to the United States are produced by firms owned by foreign companies, many of them American. These firms have moved operations overseas in response to competitive pressures to lower production costs and thereby offer better prices to consumers and higher returns to shareholders. U.S. importers with dominant positions in China, such as Wal-Mart and Hallmark, have the power to compel Chinese suppliers to keep their costs as low as possible. Wal-Mart alone purchased $18 billion worth of Chinese goods in 2004, making it China's eighth-largest trading partner--ahead of Australia, Canada, and Russia. NEIL C. HUGHES is the author of China's Economic Challenge: Smashing the Iron Rice Bowl. He was Senior Operations Officer in the China and Mongolia Department of the World Bank from 1992 to 1997 and a consultant on China to the World Bank until 2004. 194]

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