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US-China Trade Tensions Continue to Escalate - 2003-11-21

Trade tensions continue to escalate between the United States and China, which is threatening to impose tariffs on a number of U.S. products. Analysts say it does not appear that a trade war is on the horizon.

China reacted angrily this week when Washington announced quotas on a number of Chinese fabric imports. This week, Chinese officials met twice with the American ambassador in Beijing to voice their protests.

Meanwhile, China's Vice Minister of Commerce Ma Xiuhong threatened to impose tariffs on unspecified American products if the United States does not lift tariffs on steel imports. Her statement followed a recent World Trade Organization ruling that the U.S. tariffs violated international trade agreements.

The threats and counter-threats have led some to wonder if the two nations are heading for a trade war.

Daniel Bob works in Tokyo with the U.S. research organization, The Council on Foreign Relations. He says he does not think a trade war is imminent or that China will take steps to protect its economy from the United States.

"Keep in mind that the Chinese imports to the United States far outweigh U.S. exports to China," he said. "If this were to escalate into a trade war, the consequences for China would be much worse than they are for the United States."

The United States is the top market for Chinese exports and the angry exchange comes as U.S. officials say the China-U.S. trade imbalance will top $120 billion this year.

The deficit is causing contention in the United States, with some politicians and business people blaming China for the trade imbalance. They say China's policies are counter to fair trade and are causing job losses in the United States.

Mr. Bob says he believes the economic and political stakes are too high for either side to be willing to enter into a trade war.

"We have other matters that the two countries should be more concerned about, such as North Korea, and the fight on terrorism. Those are the real important issues," said Mr. Bob.

Chinese officials postponed the second of two trips by a delegation sent to purchase billions of dollars' worth of American products. In an apparent bid to avoid heightening tensions further, the Chinese foreign ministry said the delay was due to technical, and not political reasons.