Beware starting trade war, China economist tells U.S.

BEIJING (Reuters) - The United States would be the loser if it touched off a trade war by labeling China a currency manipulator or imposed import duties to offset perceived undervaluation of the yuan, a government researcher said on Tuesday.

Any punitive measures against Beijing risked backfiring because China is the fastest-growing market for American exports, Ding Yifan, an economist with the Development Research Center, told a seminar on Sino-American trade ties.

A total of 93 U.S. lawmakers have signed a letter urging Democratic leaders in the House of Representatives to schedule a vote on a bill to get tough with China over its exchange rate.

The bill would let the U.S. Commerce Department slap countervailing and anti-dumping duties on “injurious imports from any country that persistently undervalues its currency.

Ding said Beijing could also make the point to Washington that the dollar and the U.S. economy would suffer if China were to sell down its vast holdings of U.S. Treasuries.

Ding’s think tank reports to the State Council, China’s cabinet. His views reflect one strand of thinking in government circles, but not official policy. No Chinese leader has threatened to dump the country’s dollar holdings, which make up some two-thirds of its $2.45 trillion in international reserves.

Reporting by Langi Chiang and Alan Wheatley; Editing by Ken Wills