China accuses US of protectionism

China has accused the US of trade protectionism after the Federal Reserve announced plans to pump $600 billion into the country’s market to speed up the economic recovery.

“If there is no restraint in issuing major global currencies such as the US dollar, the occurrence of another crisis is inevitable,” AFP quoted Xia Bin, a member of the Chinese Central Bank’s Monetary Policy Committee, as saying on Friday.

Xia further warned that the stimulus plan, in the form of uncontrolled printing of dollars, could provoke a new global crisis and called it as “abusive.”

The US Federal Reserve announced on Wednesday that it would buy the US government’s debt in form of $75 billion of long-term treasury bills each month until the middle of next year, totaling around $600 billion.

Xia, however, called on developing countries to impose capital control measures to “prevent hot money inflows from impacting their economy.”

According to Chinese Central Bank Adviser Li Daokui, the quantitative easing steps taken by the Federal Reserve would mound pressure for the yuan as “considerable amount” of money will flow into China.

Asian governments argue that money flouted will add to the flood of cash pouring into the region and destabilize regional economy, pushing up the value of Asian currencies and making exports more expensive.

However, the Chinese official assured that china’s economy can withstand such pressures.

The US quantitative easing step is partially meant to weaken the dollar’s value by increasing the quantity of dollar currency in circulation.

A weaker dollar will help the Federal Reserve by making US exporters more competitive, stimulating job creation, and increasing inflation through higher import prices.

The spat between the US and China has increased as the US earlier accused Beijing of deliberately keeping the value of the yuan low to help its exporters at the expense of other countries.

South Korea, which is hosting the upcoming G20 summit, had warned of the international tensions over foreign exchange policies, vowing for a firm action against the spread of trade protectionism.

The summit, scheduled for November 12 to 13, seeks to tackle global problems such as the current economic crisis.