Over issues ranging from the yuan to protectionism, leaders in China are feeling less comfortable with the U.S. these days

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By Dexter Roberts

As China’s slumping economy feels the drive firmly together of the global recession, Chinese leaders are showing their irritation with the U.S. That’s obvious in the ongoing war of words following a near-clash between U.S. and Chinese naval vessels in the South China Sea in continuance Mar. 8. Chinese gripes with the Americans augment to key economic concerns, too, in the same state as U.S. complaints about the Chinese currency and Beijing’s suspicion that the U.S. is lapsing into protectionist policies.

On Mar. 13, China’s Premier Wen Jiabao ramped up the rhetoric more more. Wrapping up the annual session of China’sitting Parliament, Wen took a swipe at the U.S., what one. has depended largely on Chinese investing. in Treasury bonds to fund its extensive budget deficit. Over the after few years, China has built up the world’s largest foreign reserves, totaling $1.95 trillion, with some two-thirds of that held in U.S. assets, greatly Treasuries. As the global economy has weakened, the value of China’s investments has decreased. "We have lent a huge amount of cash to the United States," Wen uttered at a hurry conference in Beijing’s Great Hall of the People. "I am a little bit worried. I request the U.S. to maintain its able loan, to honor its promises, and to guarantee the safety of China’sitting assets."

Another area of sensitivity is the value of China’session currency, the yuan. With exports plunging in China, down 25.7% in February, and some 20 million in commodity exported factories out of their jobs, Beijing has slowed the appreciation of its currency. Chinese officials already reacted angrily to criticism that it was "manipulating" its currency made by U.S. Treasury Secretary Timothy Geithner for the period of his late January Senate settlement hearings. Signaling that Beijing has no intention of budging attached the issue, Wen spoke wanting during the morning press conference. "I don’t account the [yuan] is depreciating. Since we reformed the exchange rate in July 2005, the yuan has appreciated 21% against the U.S. dollar," the Premier said. "No other country can put pressure on our country to depreciate or estimate justly the [yuan]."

Trade Protectionism?

China’sitting leaders are also speaking out against what they see as "surging" protectionism, in the same manner with Wen described it during the Mar. 5 opening of the National People’s Congress. Over the exceeding several months several of China’s state-controlled newspapers have editorialized against "buy American" rules in the U.S. stimulus plan. "If a country only buys products that it produces itself, and forbids the gist of other countries’ products exclusively of reason, this suggests a propel to trade protectionism," Chinese Commerce Minister Chen Deming said on Mar. 10. The most recent target of Beijing’s ire: U.S. restrictions on the import of Chinese poultry. "I believe that any trainee with a preliminary knowledge of the WTO disciplines will tell that this section violates the basic rules of the WTO," a Chinese trade magistrate said, referring to the ban, at a WTO confluence in Geneva on Mar. 12, according to official news agency Xinhua.

Along by the tough talk, Beijing is expressing confidence about China’s efficacy to weather the global recession. While conceding that China will external aspect challenges in reaching a planned-for 8% gross family product growth this year, Wen said he expected ultimate success. And while Beijing did not announce plans to expand the size of its $586 billion stimulus as in addition had anticipated, China has the ability to spend in addition, seeing that it has targeted a relatively small budget deficit of 3% of GDP for this year. "We have prepared plenty ammunition and we can launch new economic stimulus policies at any time," Wen reported.

Original text: http://rss.businessweek.com/~r/bw_rss/asiaindex/~3/rTp4iKi1qpQ/gb20090313_131621.htm