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Chinese Officials Warn Against "Political" Trade Disputes

posted on May 25, 2007

Associated Press

Washington, D.C.--The Bush administration pushed for concrete results in high-level trade talks with China that began Tuesday, but the head of the Chinese delegation bluntly warned against confrontation.

Treasury Secretary Henry Paulson said it was important that the two days of talks produce results to build trust between the two countries. He said Americans were by nature impatient people, and he said the two sides should work to build a "roadmap to the future."

The administration is anxious for success stories to show an increasingly restive Congress, where lawmakers blame America's soaring trade deficits and the loss of one in six manufacturing jobs since 2000 in part on China's trade practices in such areas as currency manipulation and copyright piracy.

The U.S. delegation also raised the issue of food safety highlighted by such incidents as the deaths of pets who had eaten pet food made with tainted wheat gluten imported from China.

U.S. Trade Representative Susan Schwab, who briefed reporters on the discussions, said food safety was raised over breakfast by Agriculture Secretary Mike Johanns and Health and Human Services Secretary Michael Leavitt.

"They know this is an issue that concerns us and concerns the American people," said Commerce Secretary Carlos Gutierrez.

Labor Secretary Elaine Chao, briefing reporters at the end of the first day of talks, said that Johanns had made a forceful presentation to the Chinese about the concerns Americans have on food safety. In response, she said, Chinese officials sought to assure the Americans that they would fully investigate any problems uncovered.

In opening remarks delivered in an ornate government auditorium decked out in flags from both nations, Chinese Vice Premier Wu Yi cautioned the United States against pursuing a blame game.

"We should not easily blame the other side for our own domestic problems," Wu said, speaking through an interpreter. "Confrontation does no good at all to problem-solving."

Wu, who gained a reputation for tough speaking when she was China's top trade negotiator, said that both sides should "firmly oppose trade protectionism." She said that any effort to "politicize" the economic relationship between the two nations would be "absolutely unacceptable."

Wu and her delegation were to meet behind closed doors during their visit with key leaders of Congress, including House Speaker Nancy Pelosi, who has been a vocal critic of China's human rights policies. Lawmakers are pushing a variety of bills that would impose economic sanctions on China in the wake of a trade deficit with China that last year hit $232.5 billion, accounting for one-third of America's total record deficit of $765.3 billion.

Paulson created the Strategic Economic Dialogue last fall as a way to get the country's top policymakers together twice a year to achieve results that will ease trade tensions. The first meeting was held in Beijing last December.

Breakthroughs at this meeting were expected in the area of cutting tariffs on sales of American energy technology products and services in China and increasing U.S. airline passenger and cargo flights to China.

However, success in another area - getting China to boost the stake that American firms can own in Chinese financial service companies - seemed less certain. The current cap on foreign ownership of Chinese banks is 25 percent.

Gutierrez said there was impatience on the U.S. side. He spoke of the "need to make progress in all areas as soon as possible."

Addressing the rising anger in Congress, Schwab said, "This is not necessarily reflective of more protectionism or anti-Chinese sentiment, but rather that there are concerns there and we need to be responsive."

Sen. Edward M. Kennedy, D-Mass., and four other senators urged the administration in a letter to get commitments from the Chinese for cooperation in ongoing investigations into food safety, saying that the way China handles the issue currently was unacceptable.

American manufacturers contend that China is manipulating its currency to keep it undervalued against the dollar by as much as 40 percent, making Chinese goods cheaper in the U.S. market and American products more expensive in China.

But there was no expectation of further progress in this area after China's surprise announcement last Friday that it was slightly widening the range its currency could move against the dollar in a single day from 0.3 percent to 0.5 percent. Critics were unimpressed by the small widening of the currency band.

There were reports that China considered calling off this round of talks after the Bush administration, in an effort to pre-empt tougher actions in Congress, imposed penalty tariffs on Chinese paper products in a fight over government subsidies, and filed cases against China before the World Trade Organization complaining about lax enforcement of copyright protections for American movies, music and other products.

China in recent days has made a number of moves in an effort to defuse American unhappiness. In addition to announcing the slight change in its currency band, China earlier in the month said it would purchase $4.3 billion in American high-technology products and in recent days announced that it would invest $3 billion of its $1.2 trillion in foreign currency reserves in Blackstone Group LP, the second-largest U.S. private equity firm.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

Tags: China news politics trade