WASHINGTON — The United States Treasury’s top diplomat has ramped up his criticisms of China’s economic policies, accusing Beijing of “patently non-market behaviour” and saying that the US needed stronger responses to counter it.
David Malpass, Treasury undersecretary for international affairs, said at a forum in Washington on Wednesday (Feb 21) that China should no longer be “congratulated” by the world for its progress and policies.
“They went to Davos a year ago and said ‘We’re into trade,’ when in reality what they’re doing is perpetuating a system that worked for their benefit but ended up costing jobs in most of the rest of the world,” Mr Malpass said at the event hosted by the Jack Kemp Foundation.
He said market-oriented, democratic governments were awakening to the challenges posed by China’s economic system, including from its state-owned banks and export credit agencies.
And he reiterated his view that China had stopped liberalising its economy and was actually reversing these trends.
“One of the challenges for the world is that as China has grown and not moved toward market orientation, that means that the misallocation of capital actually increases,” Mr Malpass said. “They’re choosing investments in non-market ways. That is suppressing world growth.”
China says that its state-owned enterprises operate on free-market principles and is battling within the World Trade Organization’s dispute settlement system to be recognized as a “market economy” -- a designation that would weaken US and EU trade defenscs.
Mr Malpass said the Trump administration was “pushing back” against such policies in international forums such as the G20 and was seeking to join with “like-minded” countries to press for changes.
But Mr Malpass did not provide any details on the responses that the Trump administration is considering, which include potential trade sanctions against Beijing under a “Section 301” investigation into China’s intellectual property practices and technology transfer requirements for foreign companies.
The administration also is considering steep global tariffs on steel and aluminum, largely aimed at curbing excess production in China, on national security grounds.
China’s Commerce Ministry had said on Saturday the country will take necessary steps to protect itself if a final US decision on imposing steep curbs on steel and aluminum imports from China and other countries affects China’s interests.
The US Commerce Department has recommended that Mr Trump impose steep curbs on steel and aluminum imports from China and other countries ranging from global and country-specific tariffs to broad import quotas, according to proposals released on Feb 16.
China’s Commerce Ministry said that its American counterpart’s report was “baseless” and did not accord with the facts.
The Chinese side urged the US to exercise restraint in using trade protection tools, respect the rules of multilateral trade and make a positive contribution to the international economic and trading order.
“If the final US decision affects China’s interests, China must take necessary measures to protect its own reasonable interests,” the Chinese Commerce Ministry added, without giving details. REUTERS