MNI POLICY:China Gov Economist Sees 17 Years' Friction With US

By Iris Ouyang

     BEIJING (MNI) - China-U.S. trade frictions could last until 2035, a

government economist said Wednesday at a State Council press briefing, as

another expert said China would be reluctant to continue talks on the yuan

exchange rate.

     Here are highlights from the press briefing at the State Council:

     --The world's two largest economies are set to "fight while negotiating"

for the next 17 years, said Zhang Yansheng, senior researcher for the National

Development and Reform Commission.

     --"Before 2020, the two nations will show their swords and size up each

other's strategies, and it will be easy for misunderstandings to occur," Zhang

said. The years from 2021-2025 will be the most difficult period, as bilateral

conflict increases in trade, technology and finance, while from 2026-2035 the

two countries should gradually turn to rational cooperation from unrationed

confrontation.

     --China will find it hard to continue talks on the yuan exchange rate after

the U.S. said it needs to change its criteria and standards for declaring a

country to be a currency manipulator, said Li Yong, deputy director of the

expert committee at the China Association of International Trade. "You have a

moving standard, you use whichever fits you, we are not able to talk, and this

is actually the most fundamental (divergence)," Li said.

     --China doubts U.S. sincerity in trade talks after it demanded purchases of

some U.S. goods more than five times the amount agreed by the two nations'

presidents in December, Zhang told reporters.

     --Zhang indicated the U.S. has demanded that China make impossibly rapid

structural and legislative changes. "If we promise things we can't do, then

what?"

     -Zhang said China will not increase restrictions on American companies in

China, but improve the business environment for foreign investment.

     -The U.S. attempt to reduce reliance on Chinese exports will facilitate the

upgrading of industries in China, Zhang said, as cost-sensitive companies leave

the country and higher-end industries remain.

     --The U.S. would be likely to continue exerting pressure even if China

comprehensively adopts U.S. standards and rules, Zhang said, as this process

would make China still more competitive.

     --China still views cooperation is the only correct choice for both sides,

the government advisors said, adding that China is not trying to usurp the

U.S.'s global leadership role.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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