Chinese Government urged to apply retaliatory trade measures if the US Congress approved the application of exchange rate offset duty on China sourced goods.

This hard move from China is because if the US Congress passed the legislation on the exchange rate offset duty with Beijing, imports from China would be more costly and less competitive. “It is our wish to keep a good bilateral trade relation with the US for the sake of both sides. However, the imposition of exchange rate offset, if approved, could make imports from China to the US more expensive and less competitive. Therefore, we are forced to take retaliatory trade measures”, said the spokesman of China Ministry of Foreign Affairs.

The US Lawmakers are considering the application of exchange rate offset duty with Beijing. They said that Beijing’s hesitation in revaluing Yuan value against Dollar has made Chinese goods more competitive. Therefore, the duty should be made effective to gain fairness for the US goods.

The application of exchange rate offset duty was taken into consideration right after China General Administration of Customs (CGAC) announced the achievement of 22,4 billion dollars trade surplus in May 2007, an increase of 72,3% over last year.

China trade surplus against US hit US$ 85.7 billion in the first 5 months of 2007, an increase of 80% over the same period last year.

China now is now under pressure from the US for their trade surplus and it is obvious that this has made tensions between 2 sides  more serious.