United States law­mak­ers press China ahead of talks this week

The Pak Banker - - International3 -

BEI­JING: Amer­i­can law­mak­ers are press­ing China for ac­tion on cur­rency and high­tech trade in talks this week, and a planned Washington visit by Pres­i­dent Hu Jin­tao next month has raised hopes Bei­jing might of­fer con­ces­sions.

The meet­ing of the U.S.China Joint Com­mis­sion on Com­merce and Trade on Tues­day and Wed­nes­day in Washington comes as Bei­jing faces ris­ing con­gres­sional pres­sure over its swollen trade sur­plus. The U.S. House of Rep­re­sen­ta­tives has ap­proved a mea­sure to al­low Washington to pun­ish cur­rency ma­nip­u­la­tion and the Se­nate is con­sid­er­ing it.

Both sides are likely hop­ing for a "suc­cess­ful meet­ing with some de­liv­er­ables" ahead of Hu's ar­rival in Washington in Jan­uary, said Chris­tian Murck, pres­i­dent of the Amer­i­can Cham­ber of Com­merce in China.

"Be­cause of the tim­ing, ex­pec­ta­tions are higher," Murck said.

A group of 32 U.S. sen­a­tors, both Democrats and Repub­li­cans, wrote to the chief Chi­nese en­voy, Vice Premier Wang Qis­han, ahead of the meet­ing to press for ac­tion on a list of chronic ir­ri­tants.

They cited Bei­jing's fail­ure to stamp out ram­pant prod­uct piracy and com­plaints that its cur­rency con­trols keep its yuan ar­ti­fi­cially weak, giv­ing China's ex­porters an un­fair price ad­van­tage and wip­ing out U.S. jobs.

They also ap­pealed for an end to Bei­jing's "in­dige­nous in­no­va­tion" pol­icy, un­der which the com­mu­nist govern­ment is try­ing to nur­ture do­mes­tic technology com­pa­nies by fa­vor­ing them in of­fi­cial pro­cure­ment. Busi­ness groups com­plain that could shut for­eign sup­pli­ers out of fast-grow­ing mar­kets for com­put­ers and other goods.

Bei­jing promised more ex­change rate flex­i­bil­ity in June but the yuan has strength­ened by only about 3 per­cent against the dol­lar since then. Chi­nese of­fi­cials have re­jected a faster rise, say­ing that would lead to huge job losses.

Chi­nese en­voys might be look­ing for ways to pla­cate Amer­i­can crit­ics but con­ces­sions are likely to be limited, said Ren Xian­fang, se­nior an­a­lyst in Bei­jing for IHS Global In­sight, a con­sult­ing firm.

"It has been al­most a Chi­nese tra­di­tion for the govern­ment to make cer­tain con­ces­sions re­gard­ing bi­lat­eral is­sues ahead of state vis­its," Ren said.

Bei­jing might prom­ise more cur­rency flex­i­bil­ity, but "ac­tual im­ple­men­ta­tion will cer­tainly be aligned with China's own eco­nomic pri­or­i­ties at this moment, which means it will be grad­ual and it will re­main un­pre­dictable," she said. The U.S. trade deficit with China is es­pe­cially sen­si­tive at a time when Washington faces pres­sure to cut high un­em­ploy­ment. -Ap

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