Well no prizes for guessing what the issue of the month is going to be. This is sending ripples down every serviceable spine on the planet. On another topic. I am going to Valencia to do field work interviews tomorrow, so here's an invite to all of you with time and energy on your hands to get posting. I will be coming and going, but I will be back to normal on Tuesday.
Beijing on Wednesday denounced Washington's decision to limit imports of Chinese-made dressing gowns, bras and knitted fabrics as a betrayal of World Trade Organisation principles that threatened overall China-US trade relations.
In a gesture that appeared to underline its displeasure, China also cancelled plans to send two official delegations to the US to buy agricultural products.
"The Chinese government expresses its very great regret and its firm opposition," the Commerce Ministry said. "[This decision] runs against WTO principles of free trade, transparency and non-discrimination.
"The Chinese side hopes the US government will fully recognise the harm to bilateral trade relations and the barriers to the textile trade caused by these special trade restrictions."
Beijing stopped well short of threatening direct retaliation, with officials blaming the cancellation of the buying delegations on visa and logistical problems.
The US announced the restrictions on Tuesday, in the face of surging Chinese imports that spurred a political backlash from US manufacturers, who blame China for some of the more than 2.5m factory jobs lost over three years. The textile industry alone has lost more than 300,000 jobs.
Unless China agrees to introduce its own export restraints, the US will impose quotas that allow for only 7.5 per cent growth over the next year in the three affected products.
But its decision, which has contributed to a sharp fall in the US dollar, may have greater repercussions than expected.
The news initially sent the euro to new highs against the dollar and drove gold above $400 a troy ounce for the first time in seven years. But the dollar later rallied, gold slipped back and the Dow Jones Industrial Average closed up 66.30 at 9,690.46.
The International Monetary Fund said the US action was a risky one. "It is the kind of situation which the IMF strongly discourages on both sides, so we have cautioned the US not to use such . . . policy," said Steven Dunaway, senior adviser in the IMF's Asia-Pacific department.
The US action could prompt similar moves by other countries. Italy, which has a large textile and apparel industry, on Wednesday urged the European Union to follow the US lead. Giulio Tremonti, Italian economy minister, wrote in the Italian daily Il Sole-24 Ore that imposing new quotas would not be protectionism, but rather "a means to restore equal conditions for balanced competition".
Source: Financial Times