March 29, 2024

Beijing Opposes U.S. Rule on Technology Imports

BEIJING — China expressed “resolute opposition” and “strong dissatisfaction” with a new U.S. cyberespionage rule limiting imports of Chinese-made information technology products, the state media reported over the weekend.

The remarks underscore growing tension between the world’s top two economies after the United States accused China of backing a string of hacking attacks on U.S. companies and government agencies. China says that the accusation lacks proof and that it is also a victim of hacking attacks, more than half of which originate in the United States.

The new provision, tucked into a funding bill signed into law in Washington on Thursday, requires NASA, as well as the U.S. Justice and Commerce Departments, to seek approval from national law enforcement officials before buying information technology systems from China. The United States imports about $129 billion worth of “advanced technology products” from China, according to a May 2012 report by the U.S. Congressional Research Service.

The Chinese state media, including Xinhua, China Daily and People’s Daily, quoted a spokesman for the Chinese Ministry of Commerce on Saturday as saying the U.S. bill “sends a very wrong signal.”

“This will directly impact partnerships of Chinese enterprises and American business as they conduct regular trade,” said Shen Danyang, the Commerce Ministry spokesman.

“This abuse of so-called national security measures is unfair to Chinese enterprises, and extends the discriminatory practice of presumption of guilt,” the article in the official People’s Daily said, quoting Mr. Shen. “This severely damages mutual trust between the U.S. and China.” The United States should eliminate the law, Mr. Shen said.

The technology security lawyer Stewart Baker wrote in a blog post last week that China could claim that the United States was violating World Trade Organization rules. However, because Beijing has not signed a W.T.O. agreement setting international rules for government procurement, it may not be successful in its challenge, Mr. Baker said.

The Chinese Foreign Ministry spokesman Hong Lei urged the United States at a news conference to abandon the law. “This bill uses Internet security as an excuse to take discriminatory steps against Chinese companies,” he said.

Article source: http://www.nytimes.com/2013/04/01/business/global/beijing-opposes-us-rule-on-technology-imports.html?partner=rss&emc=rss

Inside Asia: Trade Deficit Would Test Beijing

SINGAPORE — China could record a rare trade deficit next year, which would test both Beijing’s resolve to go slowly on easing monetary policy and its trading partners’ ability to adapt.

The first quarter is shaping up to be especially tough because of weak demand from Europe and the United States, coupled with the normal spike in imports that comes with the celebration of Chinese New Year, which starts in late January.

Zhiwei Zhang, an economist with Nomura based in Hong Kong, said he expected China to import $28.8 billion more than it exports during the first three months of 2012, dwarfing the $1 billion deficit posted over the same period in 2011.

That quarterly deficit was the first since 2004, and China has not recorded a full-year shortfall in two decades.

Chinese Commerce Ministry officials have been warning for weeks that the trade outlook is “very severe.” Slowing exports are part of the reason why many economists believe that Chinese economic growth will dip below 8 percent, at least in the first half of 2012 if not the full year. The 8 percent mark is considered the minimum growth rate needed to create enough jobs to keep up with a growing urban population.

But slowing growth in China may not be such a terrible thing for the world.

“Looking from a global perspective, China’s shrinking trade surplus should be seen as a welcome development, as evidence that China has made progress in boosting its domestic demand relative to exports,” said Tao Wang, a China economist at UBS who is based in Hong Kong.

Ms. Wang said she expected export growth to drop to zero in 2012, which would trim 1.4 percentage points off China’s gross domestic product, although she does not think the trade surplus will completely vanish in 2012. And flat exports will prod Beijing to ease fiscal and monetary policy, she said.

China has shown no willingness to repeat its 2009 spending spree, which helped to insulate it from the Lehman Brothers fallout but also left behind a trail of questionable investments and a growing pile of bad debts. Instead of a deluge of government cash, the spending next year will probably be aimed at areas like affordable housing and green energy that China has already designated as development priorities.

Reducing banks’ reserve requirements, which allows them to increase lending, is widely expected to be the main policy lever. Interest rate cuts, if any, will be used sparingly.

But if a slowdown turns into something worse, China may abandon the “prudent” monetary and “pro-active” fiscal policy approach it spelled out at an annual work conference on Dec. 14.

“If the Chinese economy needs stimulation, they have the resources and the political will to do it,” Joseph Stiglitz, a Nobel laureate and economist, said in an interview in Santiago on Friday. “Unlike the United States, they don’t have half the country committed to an ideology which says the way to solve the problem is to cut spending,” he said. “If their economy slows, they’ll spend to keep going.”

If Chinese domestic growth stays resilient, the United States would stand to benefit from rising demand. U.S. exports to China reached $84.2 billion in the first 10 months of 2011, up about 16 percent from the same period in 2010, according to U.S. Commerce Department data.

However, for the rest of Asia, slower exports from China could mean less demand for imports into China. A large fraction of what China imports from its Asian neighbors is raw materials or partially finished goods for export.

Wiping out the trade surplus, which totaled about $180 billion in 2010 but probably narrowed this year, would also mean fewer dollars flowing into China. Those reserves are typically recycled into U.S. and other government bonds.

But it could conceivably propel China ahead of the United States in correcting current account imbalances that have been a source of friction between the two countries for years. Washington has long pressured Beijing to reduce its surplus and promised to tackle its own deficit.

Over the first three quarters of 2011, China’s current account imbalance was equal to 3 percent of G.D.P., below the 4 percent threshold that Timothy F. Geithner, the U.S. Treasury secretary, has linked with global economic stability. The U.S. current account deficit narrowed to 2.9 percent of G.D.P. in the third quarter.

If China’s export juggernaut really does run out of steam, the biggest adjustment the United States may have to make is in political campaigns. Anti-China rhetoric has intensified as Republicans battle over who will win the right to challenge President Barack Obama in 2012. Mitt Romney, a top Republican candidate, has accused China of manipulating the renminbi to gain an export advantage and vowed to impose trade sanctions if he were elected.

“Despite the rising rhetoric from the U.S. in recent months complaining about China’s exchange rate policy, the fundamental pressures for the renminbi to appreciate have weakened,” said Ms. Wang of UBS.

Emily Kaiser is a Reuters correspondent.

Article source: http://www.nytimes.com/2011/12/20/business/global/trade-deficit-would-test-beijing.html?partner=rss&emc=rss