China Trade Tensions in 2009

Posted by spaul on 12/31/2008

Will the new year also usher in new trade tensions between the U.S. and China?  That's the thrust of a Bloomberg piece written this week by the always insightful Mark Drajem.  The story was picked up by the Houston Chronicle and Denver Post. Drajem's reporting focuses on commitments that President-elect Barack Obama made to various groups, including the Alliance for American Manufacturing, to crack down on China's mercantalist practices such as currency misalignment.  As the recession, which is global and far reaching, continues, some countries (like China) may continue production at higher levels than global demand calls for, using subsidies and export tax rebates to prop up their industries, and potentially dumping excess supply into open markets like the U.S.  While such a scheme helps Beijing's regime maintain "stability," it harms U.S. workers and businesses. So there may be trade tensions in 2009, but if so, they will be entirely of China's making. 

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