WASHINGTON — President Bush and President Hu Jintao of China vowed to improve trade imbalances, but did not make any major breakthroughs Thursday during their first meeting at the White House.
The two presidents spoke for 90 minutes in the Oval Office against a backdrop of tensions related to China’s rapid rise as an economic powerhouse, particularly U.S. political pressure to restrain Chinese imports. They discussed issues ranging from the nuclear impasse with Iran and North Korea to China’s currency policy and further market openings for U.S. exports in the shadow of a trade deficit with China that hit a record $202 billion last year.
With protesters demonstrating outside — and a member of the Falun Gong religious sect interrupting the South Lawn welcoming ceremony — Hu said: “We understand the American concerns over the trade imbalances, the protection of intellectual property rights and market access. We have taken measures, and we’ll continue to take steps to properly resolve the issues. And in the future, we’ll continue to make efforts to improve the…exchange rate regime.”
Hu also said China will continue to “take positive steps in such areas as expanding market access, increasing imports and strengthening the protection of intellectual property rights, and further expand China-U.S. economic cooperation and trade.”
China raised the value of its currency by 2.1 percent in July in a move to change the peg of the yuan to a basket of currencies instead of only the dollar, and the currency has since appreciated by 3.2 percent, a level that many critics claim is inadequate. The Treasury Department is set to soon release a report that could label China a “currency manipulator,” which would trigger more formal negotiations and could lead to sanctions in the World Trade Organization.
“The Chinese made a major decision on their currency,” Bush said in the Oval Office. “There’s been some appreciation… .We would hope there would be more appreciation in the currency.”
Industry trade and labor associations have pressed the administration, which has a record of using diplomacy to convince China to adopt a new exchange rate system, to take a more aggressive stance. They charge that China’s policies artificially lower the price of Chinese goods by 15 to 40 percent, putting U.S. companies at a disadvantage and leading to job losses. Momentum is growing on Capitol Hill to rein in China’s economic growth.
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“I would hope the administration … makes it very clear that we expect to see real change on the currency issue, more change than we’ve seen thus far, and in the near future,” Sen. Charles Schumer (D., N.Y.), co-sponsor of legislation with Sen. Lindsey Graham (R., S.C.) to impose a 27.5 percent tariff on imports if China does not push currency reform, said at a news conference.
Schumer and Graham delayed a vote on their bill until Sept. 30 after returning from a trip to China to discuss trade issues, saying the Chinese have made progress in reforms.
“The Chinese have skillfully navigated their way through our political system, which is to make general promises to meet on a regular basis, but to actually take no substantive action, and every four to eight years a new president has to start all over again,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “We’ve heard these promises [from the Chinese] 100 times previously and it’s time for the U.S. to say, ‘You do what you think you need to do at your own pace, and in the meantime, we are going to regulate your access to our market to ensure this problem begins to get adequately addressed.'”
Tantillo said U.S. officials should initiate a “massive” WTO case against intellectual property rights violations in China and pursue cases under U.S. trade law against Chinese products that are “dumped” under market value in the U.S.