US Treasury Secretary Henry Paulson has warned that enacting
legislation aimed at punishing China over its economic policies
could jeopardize future growth and unsettle markets already on edge
over the severe difficulties in the American housing and mortgage
sector, the New York Times reported on Tuesday.
"I really do believe we are at an inflection point here,"
Paulson said in an interview with the newspaper on Monday. "When we
look at taking unilateral actions aimed at another nation, this can
have enormous repercussions to our economic well-being. You know,
we're playing with fire."
Paulson said he remained confident that the American economy was
resilient enough to survive recent market turmoil. However, he said
he feared Chinese retaliation and a loss of China as an engine of
global growth and a market for American exports.
Exports to China grew at the rate of 32 percent last year, and
the Treasury Department says total exports contributed nearly a
percentage point of the 4 percent growth of the second quarter of
2007, according to the report.
Paulson's office arranged for the interview to underscore his
concerns after discussions with leading business officials,
particularly in the financial services, manufacturing and
automotive sectors, all of whom he said are depending on exports to
help them get through current economic difficulties.
According to Paulson, all these leaders were concerned about
legislation that would impose duties or other punishment on China
if Beijing did not allow its currency, the yuan, to appreciate
against the dollar, a move that would make Chinese exports more
expensive and goods imported by China cheaper.
The business leaders feared that such legislation could lead to
retaliation by China, Paulson said.
"There was a concern that, given what's going on in the global
economy and the emerging protectionist sentiment in many parts of
the world, it could be dangerous to take a unilateral punitive
action that could lead to a trade war or that would be unsettling
to the markets," he said.
(Xinhua News Agency September 12, 2007)
