US economist cautions against trade sanctions on China

CHICAGO - Just after the US House of Representatives passed legislation which allows to impose trade sanctions on China to compensate for the "artificially weakened" yuan, a US economic expert warned against the Obama administration doing so.

David Besanko, a US economist and professor at the Northwestern University, told Xinhua in an exclusive interview that "it is untraditional for trade sanctions to be imposed on a country by the US government due to currency policy."

"It is counterproductive and if we are not careful it will lead to trade conflict with China. It is also a little bit of unchartered territory as we have never in the past engaged in trade conflict with a country as economically powerful as today's China or with a country that has such a scope in the global economy as China," Besanko said.

Besanko has years of research experience in areas including macro- and micro-economics and economics of regulation, with over 40 articles published in leading professional journals in economics and business, including American Economic Review.

"Personally, I don't think this is a risk that is worth taking," he said. "The Obama administration is treading this carefully. And if there is to be sanction, there should be very clear evidence that this has created unfair advantage in a specific industry for China. That is the traditional case where sanctions get imposed. And it is untraditional for sanctions to be imposed due to currency policy."

Although arguing against imposing trade sanctions on China, Besanko said he believed this was an effort by the Obama administration to stimulate the US economy.

"It is a natural option that the Obama administration considers although I think they could have done more through other ways to grow the economy than imposing trade sanctions."

The US House on Wednesday passed the proposed Currency Reform for Fair Trade Act to allow trade sanctions against its trade partners for allegedly manipulating their currencies, drawing worldwide concerns again.

Updated: 2010-10-02 09:44
Source: chinadaily.com.cn