Trade sanctions against China won't protect U.S. jobs, Federal Reserve Chairman Alan Greenspan said on Thursday, and he joined with Treasury Secretary John Snow in saying sanctions might backfire. The two policy-makers told the Senate Finance Committee that across-the-board tariffs might make China dig in its heels and delay moves to a flexible exchange rate. Clearly worried that rising U.S. trade deficits were driving Congress toward retaliation, Greenspan and Snow sought to tamp down the angry mood by pointing out the possible consequences, Reuters reported. Both said China should loosen the peg it maintains for its yuan currency against the dollar, in its own interest and that of the global economy, but said it would be futile to try to force Beijing to do so through trade sanctions. "A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers," Greenspan said. The Fed chief said that taking action "based on frustration" would not help correct a record U.S. current account deficit that hit $666 billion last year and is likely to swell further this year. Snow has led the Bush administration's drive to get China to ease the peg at which it has held its yuan -- at about 8.28 to the U.S. dollar -- for nearly a decade. --More 2124 Local Time 1824 GMT
