Economy

Morgan Stanley: Yuan not to blame for US woes

(Xinhua)
Updated: 2010-03-19 21:56

BEIJING - Morgan Stanley Asia chairman Stephen Roach said Friday it was ironic for the US to blame China's currency for high unemployment rate and trade deficit, and trade sanctions on China would have a disastrous outcome for the United States.

Complaints were growing about an undervalued renminbi as one of the most important factors behind the pressure on workers in the US. "Unfortunately, nothing could be further from the truth," Roach told a press conference in Beijing ahead of the 11th annual China Development Forum to be held from March 20 to 22.

"The US-China bilateral trade deficit has very little to do with the renminbi. It reflects the fact that America does not save and countries that do not save have to import surplus savings from abroad," he said when asked to comment on the US pressure for a stronger yuan.

US politicians did not want to accept their responsibilities for the unemployment rate, which was close to 10 percent, so they preferred to blame someone else, he said.

He said the US had trade deficits with more than 90 countries in 2008. The biggest bilateral deficit was with China because of outsourcing strategies made by US multinationals and because American consumers demanded low-price high-quality goods made in China.

Roach warned trade sanctions aimed at China would have the effect of shifting the Chinese share of the US trade deficit to other trading partners. That would transfer US imports to higher-cost products, the functional equivalent of a tax hike on American workers.

"This is a disastrous outcome for the United States and certainly it would be a very bad outcome for Chinese exporters as well," he said. "We'd like to talk about win-win globalization. This is an example of lose-lose globalization."