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• US Imposes Textile Quotas on Chinese Imports, China Cooperates by Taxing Exports
• Tumultuous Sino-Japanese Relations

US Imposes Textile Quotas on Chinese Imports, China Cooperates by Taxing Exports

When the 30-year-old Multi Fiber Agreement expired in January of 2005, textile exports from the developed world soared. In particular, China benefited. The widening trade deficit in the US and the widening trade surplus in China caused the US Commerce Department to impose quotas on certain Chinese garments. The list of quotas on Chinese-made garments includes men's and boys' shirts, man-made fiber trousers, knit shirts and blouses, combed cotton yarn, cotton trousers, and underwear

Chinese Commerce Minister Bo Xilai charged the US with applying double standard. Both the US and the EU had the opportunity to lift textile quotas in stages, but did not. Therefore, when all restrictions were lifted in January, Chinese textiles flooded US and European markets.

In spite of their arguments, the Chinese made a major step toward cooperating with the US and Europe by announcing new export taxes on Chinese goods. These taxes aim to slow the growth of Chinese exports in order to pacify US and European countries qualms about their growing trade deficits toward China.

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Tumultuous Sino-Japanese Relations

In April, Chinese protesters organized to protest Sino-Japanese disputes over maritime natural resources and differences in interpretations of World War II history. They pelted Japanese missions and businesses with stones, bottles and paint in demonstrations in Beijing and other cities.

Japanese and Chinese officials have been attempting to repair relations ever since.

At first there was a warming of relations, on April 22 Japanese Premier Junichiro Koizumi apologized for Japan's wartime Aggression, at an international conference in Indonesia attended by leaders from Asian and African nations.

On Sunday, Chinese President Hu Jintao met Japanese lawmakers in Beijing and said both nations should work to strengthen bilateral relations. But on Monday, May 23, 2005 the official visit of Vice Premier Wu Yi, Beijing's top-ranking woman and the most senior Chinese official to visit Japan since 2003, was halted, to protest the Premier Koizumi response to his trips to a Tokyo war heroes shrine, which is seen by Beijing as a symbol of Japan's past militarism.

When Wu Yi broached the issue, Premier Koizumi quoted Confucius, “Condemn the offense, but pity the offender." Using a paragon of ancient China to defend Japanese actions was taken as a smack in the face to the Chinese delegation, and Wu Yi’s delegation cancelled all further meetings and returned to China. The cancellation angered Japanese officials, and relations currently remain in a stalemate.

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