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American lawmakers press China ahead of talks

By JOE McDONALD,AP Business Writer

POSTED:
LAST UPDATED: 11:42 p.m. HST, Dec 11, 2010



BEIJING — American lawmakers are pressing China for action on currency and high-tech 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. The gap widened to a monthly record of $28 billion in August and is running 21 percent higher than in 2009.

"We urge China to demonstrate its commitment to adopting a market-determined exchange rate by allowing its currency to appreciate meaningfully in advance of President Hu's visit," said the Senate letter. Signers included Max Baucus, chairman of the powerful Senate Finance Committee, and Chuck Grassley, its senior Republican member.

The U.S. delegation to the 21st meeting of the JCCT is led by Commerce Secretary Gary Locke and Trade Representative Ron Kirk. Agriculture Secretary Tom Vilsack also is due to take part.

The JCCT is lower-profile than the U.S.-Chinese Strategic & Economic Dialogue, which covers cooperation on topics from geopolitics to energy and health. But companies closely watch the JCCT because it focuses on business issues and has produced agreements in the past on some disputes.

This year's meeting comes amid wrangling over access to each other's markets for steel pipes, beef, movies and other goods.

Beijing has tried to mollify criticism of "indigenous innovation" by promising to treat Chinese units of foreign companies as domestic suppliers. But that leaves out suppliers that have no operations in China, and business groups worry local governments still exclude foreign companies.

The senators warned Wang that Beijing's innovation policy has a "corrosive effect" on business confidence and support for U.S.-Chinese economic relations.

"It is in our mutual interest for China to suspend these discriminatory policies," their letter said.






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