US woes are not our fault, Chinese economists say

China is not to blame for US economic woes, Chinese economic researchers said in state media reports on Saturday, hitting back at US complaints about unfair trade and China's currency policy.

"The actions and criticism against China makes no sense," Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, a ministry of commerce think-tank, told China Daily in an interview.

He said the Obama administration had made China a scapegoat to please voters ahead of mid-term elections.

The comments follow US treasury secretary Timothy Geithner's promise to rally other world powers to push China for trade and currency reforms.

China's central bank said in June it would let the currency fluctuate more freely. Since then it has risen 1.53%, but many economists say it is undervalued by up to 40%.

China's government could not have let the yuan appreciate faster because of China's own economic situation, Huo said. In the longer term, the yuan would rise against the dollar.

"The US moves do not hold any water and China must come out strongly against them," he said.

Zhang Monan, an economist with the State Information Centre, a top government think-tank, said the United States gained more than China from their relationship as the world's biggest debtor and the world's biggest creditor.

"Ironically, being the largest debtor nation has not restrained the mammoth that is the US Instead, its huge debt has been used as an effective apparatus to maintain and extend Washington's decades-old global financial hegemony," she wrote in a commentary in China Daily.

She said the United States was able to take advantage of the dollar's falling value and the currency's dominant position in international financial transactions to cut the country's foreign debts.

"From 2002 to 2006 alone, an accumulated $3.58 trillion worth of US debt evaporated because of the Federal Reserve's increased issuance of the dollar or the decision to devalue the greenback as the world's leading reserve currency."

At the same time, US investments overseas earned much more than the 3.5% average return ratio that foreign creditors got from 10-year US debts, she said.

"Compared with the advantage the US enjoys in the global financial scope, China is still not a credit power in the real sense despite its status as the world's largest creditor nation. It is more like a depositor that puts its enormous funds into the bank only to gain a low interest, before borrowing from (the) bank by paying a much higher rate."