Thailand, Indonesia, Myanmar, Bangladesh, the Netherlands, Azerbaijan, the Congo, Vietnam, Alaska and the lower 48 states of America.

The resolution and public clamour have caused severe reversal of the policy of Chinese companies going ahead outward. In the face of the decision by the board of Unocal to accept the latest bid of Chevron corporate, which is still below the Chinese offer. CNOOC neither raised its offer further, nor contested the deal and finally backed out. Meanwhile, another Chinese company, Haier Group, China's largest home appliance maker, withdrew from the three-way contest to buy America's number three appliance maker, Maytag. Maytag's shares in the market fell dramatically with the announcement of withdrawal by the Chinese company.

The fact remains that China is the single largest investor in America. China's holding of American treasury securities amounted to $ 600 billion. This reminds me the outcry of Democrat Congressman Jim Moran, who said "we may be the most powerful nation in the world, but China, as the largest investor, has a great deal of leverage. This poses a threat to our sovereignty."

America has taken initiative to propagate free trade globally as the best means to develop strong economy. In this context, America has ratified a number of bilateral and multilateral free trade agreements. The present trend tends to be diametrically opposite.

Since the global trade in textiles and ready wears became quota free from January 1, 2005, China like other textile producing countries prompted to flood the markets in EU and America. While EU chose to negotiate with China over limiting imports of clothing and textiles, America slapped new quota on several categories of clothing and textiles imports from China with effect from May, 2005.

A protectionism in the market economy? This reminds me what Dr. Supachai, Director General, WTO said: "It is through trade that countries can chart a path towards sustainable development and a higher standard of living while the trend is encouraging. Trade expansion is still hampered by barriers, which must be brought down."

Apparently America remains engaged in protectionism. There had been constant pressure on China to revalue its currency: Yuan. In April, 2005 the Senate voted 67-33 in favour of considering legislation that would impose a 27.5 percent tariff on all Chinese exports to America. The implementation of the legislation is delayed to give time to China reconsider revaluing its currency. China already criticised Bush administration for violating WTO rules with the imposition of a new US import quota on Chinese textiles. China was of opinion that the timing of yuan revaluation would not be decided by Washington, but by Beijing. In spite of imposition of quota by America, three months statistics ending in May, 2005 shows that America has trade deficits with China amounting to $ 15.8 billion. America has turned out to be the biggest trading partner of China. However, China is projected as an unfair trader.

In view of growing campaign by the Congress and some business circles, China announced its decision on July 21 to raise the value of Yuan by about 2 percent in an effort to buy foreign assets at cheaper rate while its export would cost more. That means poor consumers would pay more to buy Chinese products in America. Presently 1 dollar is pegged to 8.11 Yuan. The move was welcomed by Bush administration. Possibly China's decision to revalue its currency deters imposing 27.5 percent tariff on Chinese exports. In the long run the country which is campaigning to revalue Yuan will have to regret as China's purchasing power would allow it to buy more oil and gas as its strategic goals.

It is not understood why the political clamour remains mute when billions of dollar assets of America are acquisitioned by the Chinese institutions which include treasury bonds and notes and recent purchase of well-known American businesses: IBM's personal computer business by Lenovo Group Ltd. At a cost of $ 1.75 billion.

However, China's overall commercial presence in the United States has been modest. In 2004, Chinese firms accounted for only $ 490 million of US direct investment whereas US multinationals have $ 15 billion in China. An interesting comparison of capital flows between developed and developing countries in 1997-1998 was given by Paul Krugman, columnist in the New York Times (Published July 22). He is of the opinion that "these days things are running in reverse; capital is flowing out of emerging markets, especially China, and into the United States". Japan, Korea, India, Taiwan and some Middle East countries are investing in developed countries, including America. According to Jephraim P. Gundzik, President of Condor Advisors, Inc, "the politicisation of economic relations between Washington and Beijing poses a significant threat to the US economy. Efforts to push the price of China's imports higher with quotas and tariffs will push inflation higher."(Condor Advisors provides emerging markets investment risk analysis).Therefore, the administration and Congress should understand and reassess its opinion and avoid unnecessary quarrel with China in the interest of America's economy.

Mohammad Amjad Hossain, a former diplomat resides in Virginia.