China’s Premier Wen Jiabao on Friday took aim at what he called “rising trade protectionism”, saying trade disputes were hampering a global economic recovery.
“What is worrying is that… trade protectionism is rising sharply,” Wen said in a televised speech. “Trade protectionism will only slow the pace of world economic recovery.”
The Chinese leader made no specific mention of the United States or other countries, but his remarks followed the US Senate earlier this week passing legislation aimed at punishing China for its alleged currency manipulation.
Some US lawmakers and officials say China’s currency is undervalued, giving the country an unfair trade advantage by making its exports cheaper.
The politically sensitive US trade deficit with China rose to a record level of $29 billion in August, the US Commerce Department said Thursday. The figures are likely to fuel allegations China keeps its currency artificially weak.
Wen, who was speaking at a trade fair in the southern city of Guangzhou, said countries should be “rational” in dealing with trade disputes.
“The shadow of an international financial crisis could be removed as soon as possible… only if we properly handle international trade friction in a more rational way,” he said.
Although leaders in the US House of Representatives have signalled they would block the currency bill — meaning it will not become law — anti-China sentiment is on the rise ahead of US elections in November 2012.
Beijing has denounced the bill as a “ticking time-bomb” that threatens to blow up trade ties between the economic superpowers, and US House Speaker John Boehner has said he would block the bill to prevent a “trade war”.
China’s overall trade surplus actually narrowed to $14.51 billion in September as exports slowed, hit by economic turmoil in the United States and Europe, according to official figures.
The country’s exports rose 17.1 percent year-on-year to $169.7 billion, slowing from a 24.5 percent rise in August.
Worries over slowing overseas sales will prevent China from allowing its currency to appreciate more sharply, amid fears this would hurt exports, which are a major driver of economic growth, analysts said.
China defends its exchange rate regime, saying it is moving gradually to make the yuan currency more flexible.
The yuan has risen more than seven percent against the dollar since mid-2010, when Beijing relaxed a de-facto peg to the US currency, imposed in 2008 to protect its exporters during the global financial crisis.