In a much-anticipated report, the US-China Economic and Security Review commission has accused Beijing of deceptive economic practises, effectively reigniting the two countries’ spat over currency and trade issues.
Presenting its findings to the US Congress, the congressional advisory panel has recommended the Obama administration to take tougher actions against what it calls China’s policy of keeping its currency undervalued.
On Wednesday, the commission said that China is creating global imbalances and using “market access-limiting practises” that fall outside its World Trade Organisation commitments.
The report added that the Chinese government wants its yuan currency to serve as a more international currency, and that it has continued buying up US debt and has become the single biggest foreign buyer of treasury securities.
“Although the size of China’s holdings has raised concerns about the degree of influence China has on the US economy, the lack of alternatives and the potential detrimental impacts on China’s economy make it unlikely that China would stop buying US debt or liquidate its holdings altogether,” the report said.
Not a military threat
Daniel Slane, the chairman of the US-China review commission responsible for the report told Al Jazeera: “We should try to structure a long term currency re-evaluation and be sensitive to the Chinese issue of not creating instability, we can’t expect them to change their currency dramatically over night without creating any problems.”
On China’s military build-up and the possible threat to the US he said: “What is happening is that the Chinese are modernising their military.
“They have developed missiles that can reach our bases in the far east, that is some concern for the defence department.
“They [the Chinese] have also developed an anti-ship missile that can hit a moving ship a thousand miles off their coast, we believe that more can be done to counter this threat and that is something the defense department is working on.
“We have some hope that in the next five year plan which will come out in the spring we will talk about switching from an export driven economy to a domestic consumption economy and opening up their market to US export,” slane said.
Beijing has repeatedly rejected US accusations that its currency is undervalued, and it contends that a stronger yuan will not ease the US trade deficit.
Chinese officials say globalisation of production also has contributed to trade imbalances and the US must solve its problems of unemployment, overspending and low savings.