The US has tried in the past to cut off China from directly accessing

oil and gas from major global producers.

 

March 21, 2010 (Hamsayeh.Net ) - China issued a stern warning to Washington hawks against politicizing the Asian country’s currency issue as the main cause of trade imbalance between the two states.

 

China’s commerce minister Chen Deming said Beijing is prepared to take retaliatory measures if the US label China as a currency manipulator and thus paving the way for imposing extra tariffs on imported goods from China.

 

The United States designation of China as a currency manipulator will come April 15, a deadline for the US treasury to decide whether it should call China a currency manipulator or not. Imposition of higher tariffs on Chinese manufactured goods to the US market would kick start a full-fledge trade war between the two economies.

 

A nuclear-armed nation, China has different ways of retaliating against US hostilities. Beijing is the largest holder of US treasury bonds and has accumulated huge sums of US dollar in its foreign reserves. A sudden dumping of those holdings will cause a chain reaction, which will cause a major collapse of the US economy within a short period.

 

China’s commerce minister said the US is wrong in bringing up the issue of the yuan as a bargaining chip. ‘The currency is a sovereign issue and should not be an issue to be discussed between two countries,’ Chen said while adding ‘We think the renminbi (yuan) is not undervalued, but if the U.S. Treasury gave an untrue reply for its own needs, we will wait and see. If such a reply is followed by trade sanctions, I think we will not do anything. We will also respond if this means litigation under the global legal framework,’ as reported by Reuters.

 

The US accuses China, to artificially keeping its currency at 40 percent below its true value and that is causing a significant trade imbalance. A lower Chinese yuan also takes away US’ competitiveness in the international markets and cause widespread offshorings and therefore greater unemployment for Americans.

 

The yuan currently stands at 6.83 to a dollar. The US has tried in the past to cut off China from directly accessing oil and gas from major global producers, particularly from the Middle East.

 

The US strategy is to keep China dependent on Western energy manipulators and financial centers, but Beijing has taken own major initiatives to seal large contracts with energy producing regions in all parts of the world including in Latin America, Africa, Russia, Central Asia and the Middle East.