Larry Kudlow, the former economic adviser to President Ronald Reagan, said the biggest hindrance for U.S. companies doing business in China is regulation, not currency manipulation.
“It's one of the problems with China … this issue of China trade protectionism,” he said on cable channel CNBC. “The United States government has to persuade China to lower its tariffs and its non-tariff barriers.”
President Donald Trump made China a key target for criticism during the election, bashing the world’s second-biggest economy for making its currency artificially weak in order to make its goods more affordable for Americans. Trump has threatened to label China as a currency manipulator and impose penalties on imports from the Asian country.
Trump this week will host Chinese President Xi Jinping at his Mar-a-Lago estate in Palm Beach, Florida. The two leaders are expected to discuss trade relations and security, particularly as North Korea’s nuclear weapons program grows more menacing.
The difficulty in labeling China as a currency manipulator is the yuan's recent strength. The Chinese currency this year has gained 1.4 percent compared with the U.S. dollar after losing value during the second half of 2016. China’s economic growth has stabilized, and the country has tried to crack down on capital flight.
Kudlow says Trump should press China to make foreign direct investment easier for U.S. companies seeking to enter its markets.
“U.S. companies don't have the same rights in China,” said Kudlow. ”If an American company wants to build something in China -- make an investment in infrastructure, factory, whatever -- they have to put up now with these local provincial regulations. That’s fairly new and that has to be discussed in the talks.”
Kudlow, who advised the Trump campaign on economic issues, is a radio talk-show host and author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.
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