Mounting American pressure on China Inc.

MOunting American pressure on China Inc.

For observers it is clear America and China are engaged in a trade war. Within WTO World Trade organisation China has to make concessions regarding the exportation of raw materials

Recently the American government has changed its attitude towards Chinese state capitalism thus a paradigm shift because American companies and politicians feel that the trade distortions are created by the “China Model” and they demand competitive neutrality, as explained by Secretary of State Hillary Clinton in New York. Treasury Secretary Timothy Geithner stated that the Chinese state capitalism and its “subsidies (in open and hidden form) and distortions are very damaging to trade partners”. This new American attitude is pointing at the many Chinese state owned companies one can find in great number also in textile manufacturing. Of course China denies this criticism and declares to have the right to develop its own economy. The Trans-Pacific Partnership in creation is also a signal to China, either you change or you don’t join. So far, it is only an exchange of rhetorical hypes but an escalation might be possible and there are always two sides to the medal.

The newest figures from China confirm that exports are on decline, in January 2012 -0.5 % on year to year basis or 15.3 % in 2011. Exports fell in January by 14.2 % against December, a bit less than an average 17.6 % month-to-month decline in the comparable month in the last decade. Also imports are declining, a 22.4 % month-to-month fall compares with an average of 17.4 % decline for the New Year month in the past ten years.

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