Updated: 2005-06-29
The world must adapt to Asia's rising superpowers China and India and avoid imposing tariffs to protect their economies, a World Bank official said on Wednesday.

Trade restrictions such as the temporary tariffs imposed by the United States on Chinese textiles were outdated forms of protection, said Peter Stephens, the World Bank's regional communications manager for East Asia and the Pacific Region.

"The world still thinks of China as an issue that needs to be managed," he said at a briefing in Singapore.

"Attempting to manage the world's fastest growing economy and the country with the world's biggest population is preposterous. It's delusional."

The comments came a day after the World Bank's director for China, David Dollar, said Beijing's exchange rate policy that keeps the yuan valued between 8.276 and 8.28 per dollar was a "legitimate choice" and not a manipulation of the yuan currency.

The World Bank has said China's exports have climbed at a 20 to 30 percent annual clip, well ahead of world trade growth rates of just 6 to 8 percent.

Clothing and textiles were the biggest contributors to a swing in China's trade balance to a surplus of $21 billion in the first four months of 2005 from a deficit of $11 billion a year earlier.

"In the face of rising exports, imposing tariffs and restrictions on trade is the worst response," Stephens said. "It is unfair and it is bad policy."

"LEGITIMATE CHOICE"

The European Union has also considered imposing tariffs to curb textile imports from China but came to a deal with Beijing earlier this month to limit growth in the shipments of some goods.

EU figures show imports of Chinese T-shirts rose 187 percent in the year through the first quarter of 2005.

Stephens said tariffs might slow China textile imports, but would only push jobs to other parts of Asia like Cambodia and Vietnam or other regions like Latin America or Africa.

He said the world needed to make real progress in boosting multilateral trade.

The row over textiles has added fuel to a debate over the value of the yuan, which has been held in its current range for a decade.

U.S. lawmakers and manufacturers argue the exchange rate policy gives China's exporters an unfair advantage in world markets.

The U.S. Treasury Department last month warned that China risked being branded a manipulative trading partner if it did not take significant action on its currency in the next few months.

But the World Bank has said China's cautious stance was a "legitimate choice."

On Tuesday, Dollar said he disagreed with criticism that China was manipulating its exchange rate.

Stephens said the world needed to adapt and stop viewing China and India as emerging economies.

"It is done. They have emerged," he said. "They are now in a position where they are going to get bigger, more influential and more powerful."