China's assessment of the trade relationship with the U.S.: The imbalance isn't that bad, job losses at U.S. steel mills aren't China's fault and Beijing's yuan interventions benefit the U.S.
Four months into Donald Trump's presidency, China's Commerce Ministry on Thursday issued a special report defending its trade policies and practices in matters from market access to the exchange rate.
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Washington and Beijing earlier this month reached a deal pledging closer cooperation in agricultural trade and financial services, but avoided more divisive issues such as the Chinese industrial overcapacity that has flooded global markets with cheap steel and aluminum.
It is "untenable" for the U.S. to blame job losses on the Chinese government's support for its steel industry, the 117-page English version of the report said, instead citing slower global economic growth and advances in technology.
The ministry also said the U.S. trade deficit with China in goods has been exaggerated, in part by complications of statistical methodologies such as calculations of reshipping.
Citing a joint study by the ministry and the U.S. Commerce Department, the report said the trade deficit in goods had been overstated by 19% between 2008 and 2014. The Office of the U.S. Trade Representative put last year's goods trade deficit with China at $347 billion, while China reported a goods trade surplus with the U.S. of $254 billion.
But China runs a trade deficit with the U.S. on services, such as Hollywood movies. Based on the joint study, the ministry put last year's overall trade gap at $164.8 billion.
The report also defended China's obstacles to U.S. investment in sectors such as banking, securities, insurance and manufacturing.
"China believes that the level of openness of a country is determined by national conditions and is closely related to the political system, economic system, development level and regulatory capacity," the report said.
As for Beijing's use of foreign-exchange reserves to steady the yuan, the report argues that it isn't manipulation but rather intervention "favorable to the international community, including the U.S."
The central bank has taken steps to prevent the yuan from depreciating too fast. President Trump has criticized China's currency practices, though he hasn't acted on his campaign pledge to label the country a currency manipulator.
Beijing will seek a balance between flexibility and stability for the yuan, the ministry said, adding that it will gradually reach a "new equilibrium" after a period of volatility. In recent days, the yuan has closely followed the dollar's movements.
The ministry also repeated the government's vows to ease market access and increase imports of some U.S. goods, such as agricultural products. It called on the U.S. to ease limits on high-tech imports and improve treatment of Chinese companies that invest in the U.S.
After reaching their deal earlier this month--which followed an April meeting between Mr. Trump and Chinese President Xi Jinping--the two governments agreed to work on a one-year plan to further tighten trade ties.
(END) Dow Jones Newswires
May 25, 2017 04:02 ET (08:02 GMT)