Battling China over auto parts

Scott Tong Sep 15, 2006

BOB MOON: Here’s a bit of Washington, D.C., lingo for you: “Responsible Stakeholder.” That’s what the Bush Administration says it wants China to be, an economic and political grown-up on the world stage. Today the U.S. shoved a bit, taking Beijing to task on a few fronts: trade, weapons sales, and lending practices. A new round of China bashing? Maybe.

But you can bet the White House won’t be doing much “panda hugging” this election season. That’s more D.C. lingo for, well, you get it. Marketplace’s Scott Tong reports.

SCOTT TONG: Complaint No. 1: Protectionism. When western carmakers operate in China, they pay extra tariffs if they don’t use enough Chinese parts. Today the U.S. joined Canada and the European Union and complained to the World Trade Organization.

Auto analyst Mary Beth Kellenberger:

MARY BETH KELLENBERGER: It’s been a proposition from the beginning of China joining the WTO that they would create a more fair, equitable environment. They’re just very slow to come around to that position.

Complaint No. 2: Lending practices. A U.S. treasury official today accused Beijing of shopping high-interest loans to developing countries. John Tkacik of the conservative Heritage Foundation thinks China’s using economic muscle to gain political clout.

JOHN TKACIK: If you can overload poor African countries with trade financing that’s pretty expensive, the Africans are going to look for ways of trying to delay paying, and the Chinese are going to extract their pound of whatever it is they need.

And Complaint No. 3: Weapons. A top Pentagon official calls China a “serial proliferator”— selling to North Korea and Iran, among others. Beijing today called the accusation “groundless.”

Now, these are three separate spats. But economist Robert Dunn of George Washington University finds it a politically convenient time to bash China.

ROBERT DUNN: What we’re going to see for the next seven, eight weeks is anything and everything that plays to certain popular sentiments. And China is seen as threatening.

In Washington, I’m Scott Tong for Marketplace.

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