Economic Conflict Between China and the US May Reappear at Any Time

Tuesday, July 27, 2010
By Paul Martin

by Robert M Cutler
OilPrice.com

Political friction over economic issues between the US and China has faded for the time being, but its sources remain and may reappear at any time.

Currency issues have been at the center of relations between the US and China since the end of last year. Earlier this month the Obama administration chose not to name China as a ‘currency manipulator.’ Doing so would have opened the door to imposing heavy tariffs on Chinese imports. The next day, China’s State Administration of Foreign Exchange announced that it would not divest its US Treasury holdings.

However, it is clear that China will pay first attention to keeping its own domestic house in order, with international considerations being only secondary. This is the source of now-latent but continuing tension with the US over economic issues; and the international effects of Chinese domestic economic policy are not limited to the US.

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