China chides U.S. for criticism over trade, yuan
(Reuters)
Updated: 2006-02-14 20:39

EVERYBODY GAINS

Cheng said China and the United States should start to bridge their differences over trade by agreeing on the size of the problem.

China reported its surplus with the United States last year at $114.2 billion. Washington put its deficit with China at $201.6 billion.

The discrepancy is largely because the United States counts exports shipped through Hong Kong as originating in China. The United States also counts the cost of shipping and insuring exports in its figures.

Cheng urged Washington to acknowledge the benefits it reaps from trade with China. He quoted a study by U.S. investment bank Morgan Stanley estimating that U.S. consumers had saved $600 billion in the past decade from buying goods made in China.

China had also plowed a lot of the earnings from its trade surplus into U.S. bonds, helping to lower interest rates for U.S. home buyers, Cheng said.

He called on the United States to help reduce its deficit with China by relaxing rules on high-tech exports, which Washington fears could be adapted for military purposes.

China sourced only 10 percent of its high-tech imports from the United States, he said. This was not enough. China had to be allowed to buy more than Boeing Co. aircraft.

"If the United States doesn't want to export, how can we achieve balance in our trade?" Cheng asked.

Vice Commerce Minister Yi Xiaozhun also tried to turn back Washington's complaints, telling the same forum that China sought to achieve broad balance in its foreign trade.

He said 83 percent of China's trade surplus reflected exports by foreign firms that had built factories in China to take advantage of its cheap labor.

"If we look at the figures, it appears the United States is running a big trade deficit. But after doing some analysis, we can see it's mutually beneficial and that the United States and China share a roughly similar level of benefits," Yi said.