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U.S.-China Talks Key to Jobs, 'Stability'

Monday, 21 May 2007 | 5:08 PM ET

Ahead of Tuesday’s trade talks between top U.S. and Chinese officials in Washington, D.C., experts joined “Power Lunch” to provide perspective.

“This is the ‘put up or shut up’ summit,” said Peter Navarro, author of The Coming China Wars. Navarro, a professor at University of California at Irvine, explained that an undervalued Chinese yuan acts like a “giant tariff on U.S. exports,” and it has “lulled the American consumer to sleep like heroin, because it provides cheap Chinese goods.”

China Trade Talks
Debating the end result of this week's trade discussions between the U.S. and China, with Peter Navarro, author of "The Coming China Wars," and Robert Scott, Economic Policy Institute international economist

Some estimates hold that the U.S. economy lost 1.8 million jobs in the last four to five years, due to the trade deficit with China. Robert Scott, an international economist at the Economic Policy Institute, said the deficit "threatens the stability of the U.S., and the global economy.”

Meanwhile, Navarro said, currency manipulation is overheating the Chinese economy. At $250 billion per year, China accounts for almost half of the U.S. trade deficit. Navarro expects that if China does not appreciate the yuan, Congress will launch its own currency reform bill.

Scott agreed: “[Treasury Secretary Henry] Paulson needs to have the leverage that real action, real legislation would give the administration to negotiate with the Chinese.”

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • Tyler Mathisen co-anchors CNBC's "Power Lunch." Mathisen also co-anchors "Nightly Business Report produced by CNBC."

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Kenny Polcari