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Greenspan warns lawmakers against protectionist tariffs

The US administration and Federal Reserve chief Alan Greenspan have issued blunt warnings to lawmakers against slapping "protectionist" tariffs on China in a bid to protect US jobs.

Both Greenspan and US Treasury Secretary John Snow used a special Senate hearing on Thursday to stress that it is in Beijing's own economic interest to revalue its currency against the dollar.

But Greenspan was frank in rejecting talk that a yuan revaluation would be a panacea for US industry, which complains that it has lost hundreds of thousands of jobs to unfair trade practices including rigged currency systems.

There is "no credible evidence" that a revaluation or US tariffs would help protect US manufacturers, as production would likely shift to other low-cost centers in Asia and Latin America.

"Few, if any, American jobs would be protected," Greenspan said.

The yuan has been tied to the US dollar for the past decade at around 8.28. That rate, according to the view in Washington, makes Chinese goods far cheaper overseas to the detriment of foreign rivals.

Committee member Charles Schumer, a Democrat, said the time for talk with China is over. He is pushing a bill that would slap a 27.5 percent tariff on Chinese imports if Beijing does not take meaningful steps to revalue the yuan.

"The opponents of our bill are protectionist. They are protecting China from joining the community of free trading nations," he said.

Snow reaffirmed US government policy that China's currency system is now "highly distortionary," but that it does not yet meet the requirements to incur US retaliation.

He said he sympathized with members of Congress angry at Chinese policies, warning that Beijing must play by the rules of international trade including protection of intellectual property rights.
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