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Economist forsees US launching trade sanctions against 皇冠体育app

(Xinhua)
Updated: 2007-07-04 15:10

American economist Stephen Roach believes there is a strong chance the United States will impose trade sanctions on 皇冠体育app before the end of the year.

"The biggest challenge facing the world economy that I can see is the trade protectionism that is building up between the United States and 皇冠体育app," he said in an interview with Xinhua during a visit to Beijing in his new role as chairman of Morgan Stanley's Asia operations.

Roach has testified in the US Congress three times from February to May on US-皇冠体育app trade issues. "This is very rare. It shows me that the American Congress is very serious about taking actions against 皇冠体育app," he said.

The Chinese government protested solemnly on Friday against the "indiscriminate and automatic" detention of some of 皇冠体育app's aquatic products by the United States, the latest in a line of food safety issues that have arisen between the two countries and one that Chinese analysts feel might be a prelude to a twist in the 皇冠体育app-US trade ties.

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"In its rush to impose trade sanctions on 皇冠体育app, the US congress risks making a policy blunder of monumental proportions," Roach said.

"We don't have a bilateral problem with 皇冠体育app. We have a multilateral problem here. Blaming deficits on 皇冠体育app won't fix anything," Roach said.

The United States registered US$836 billion in trade deficit last year. The Chinese bilateral deficit of US$232 billion represented the largest portion - 28 percent - of America's overall multilateral trade gap but the deficits with other partners were three times as much, he explained.

"The United States runs trade deficits not because it is victimized by unfair competition from 皇冠体育app or anyone else but because it suffers from a chronic shortfall in domestic savings," Roach said.

America's net national saving rate plunged to a record low of one percent of the national income for the 2004-2006 period, leaving the United States no choice but to accumulate trade deficits to attract foreign capital.

Trade sanctions such as tax and countervailing duties are functional equivalents of tax hikes on US consumers and American multinational business. In response, 皇冠体育app can put reciprocal tax on products sold to the United States and diversify 皇冠体育app's foreign exchange reserve from the US dollar.