China Under U.S. Scrutiny as Trade Anger Grows by Glenn Somerville and Doug Palmer

A shrinking U.S. job market has put China under an increasingly harsh spotlight as manufacturers and labor unions complain about the Asian giant's trade practices and currency policy.


With the 2004 presidential election looming, the rumblings are an uncomfortable reminder for President Bush of a staggering loss of jobs in his tenure -- some 2.6 million in manufacturing alone since mid-2000.


The issue is unlikely to go away.


"My sense is that things are going to get worse," said economist Sung Won Sohn of Wells Fargo Bank in Minneapolis.


"We're going to see more jobs continue shifting to China, and its manufacturing sophistication will keep increasing," given China's vast work force and expanding design and engineering skills, he predicted...


China expert Nicholas Lardy of the Institute for International Economics said China's "very weak" banking system meant that pushing the country for currency reform could be unwise, and he praised Snow for recognizing that.


"He's clearly signaling the Bush administration does not believe this is the time to push for opening China's currency system to the full force of competition," Lardy said.


Clyde Prestowitz, president of the Economic Strategy Institute, said China presents a perplexing problem since the United States lacks leverage over the country's currency system and also has a vested interest in China's continuing economic health.


"China is one of the few areas of the world that's growing, and one reason they're growing is because their currency is undervalued," Prestowitz said. But, he asked, "Are we really going to zap them and effectively tell them to stop growing?"

Yeah, we probably will.