胡锦涛主席访美专题报道

Hu, Bush meeting mostly ceremonial

By Mark Silva
Washington Bureau
Published April 20, 2006, 6:42 PM CDT


WASHINGTON -- With a 21-gun salute and an array of military honor guards, President Bush welcomed President Hu Jintao of China to the White House for an hour-long meeting and a ceremonial lunch, but they had little tangible to show for a meeting marred by protest on the South Lawn.

The chief executives of the world's greatest economic power and the world's fastest-growing economy had much to discuss in private―the undervaluing of the Chinese currency that intensifies a trade imbalance between the two nations, the buildup of the Chinese military, denial of human rights in China and a mutual concern about the nuclear ambitions of North Korea and Iran.

The fact that the two leaders had scant progress to cite after their meeting is emblematic of the strain that permeates U.S.-Chinese relations, and it is likely to spur new interest among members of Congress already pursuing trade sanctions against China, according to American experts on U.S.-Chinese relations.

The White House had signaled before Thursday's meeting that no significant agreements would emerge. And the pomp that the Chinese president had sought as part of a grand White House reception was undermined by a Chinese-American protester shouting an objection to religious persecution in China from a news camera platform.

Among the biggest irritants between the two nations is a U.S. trade deficit with China that has exceeded $200 billion. Central to that deficit is China's insistence on pegging its currency to the American dollar, which allows the yuan to trade 20 to 40 percent below its actual value.

Allowing the yuan to float, experts say, could help alleviate a trade deficit in which U.S. imports from China are six times greater than U.S. exports there.

"The issue that overrides, and in a sense frames, the whole economic relationship is the trade imbalance," said C. Fred Bergsten, director of the Institute for International Economics. "The failure of China to permit its currency to move, as most other countries in the world are doing, leads to a major protectionist trade reaction here in the United States."

Bergsten, co-author of "China: The Balance Sheet," added, "Congress is saying, 'Well, if they continue to insist on an unfair trade competitive advantage by blocking rise in the value of the currency, the only thing we can do, more in sorrow than in anger, is to hit them with trade restrictions."'

The one point Bush and Hu agreed on publicly was the importance of improving the relationship between the U.S. and China, a nation of 1.3 billion whose economy is growing 10 percent a year.

"The United States and China are two nations divided by a vast ocean, yet connected through a global economy that has created opportunity for both our peoples," Bush said in his welcoming remarks.

Behind the scenes, according to one senior administration official, Bush pressed Hu on "the issue of inflexibility" in China's insistence on controlling the relative world value of its currency.

"We don't agree on everything," Bush said while taking questions with Hu in the Oval Office from a small group of reporters. "But we're able to discuss our disagreements in a spirit of friendship and cooperation."

Hu, citing broad agreement on "common strategic interests," said, "As for the differences or even frictions between the two countries … we both believe that they may be properly resolved through consultations on an equal footing."

Asked why he has been unable to persuade China to quickly revalue its currency, Bush offered an uncharacteristically terse comment. "There has been some appreciation in the currency," he said. "We would hope there would be more appreciation in the currency."

Both leaders had a moment of discomfort when a woman given credentials by a newspaper affiliated with Falun Gong, a religious group banned in China, called out her protest from the press camera platform.

"President Bush, stop him from killing!" shouted the woman, identified by her newspaper as Wang Wenyi, a pathologist and Falun Gong practitioner from New York.

"You're OK," Bush told Hu, encouraging him to continue his remarks as the woman yelled. Hu did so, saying, "The Chinese people have always cherished goodwill toward the American people."

Secret Service agents removed Wenyi from the White House grounds, and she was charged with disorderly conduct, a spokesman said. National Security Adviser Council Stephen Hadley said Bush later apologized to Hu for the incident.

For the Chinese, the symbolism of the meeting was paramount, said Derek Mitchell, an Asian specialist at the Center for Strategic and International Studies who served in the Pentagon under President Bill Clinton.

For the U.S., "symbolism matters" but "what we care about is results," Mitchell said. As a result, he suggested, "there is a lot of frustration. … There is not a sense that China is giving on anything."

The currency question is not the only unresolved conflict. Rep. Mark Kirk (R-Ill.), co-chairman of the House's bipartisan U.S.-China Working Group, joined a few lawmakers meeting with Hu on Thursday. Kirk said the House members focused on protection of intellectual property rights. Theft of patent and copyrights in China is a major concern for U.S. businesses.

"I did not meet very many U.S. exporters in China that put the currency issue at top," said Kirk, who traveled to China in January. "In fact, I didn't meet any. Nearly all of them put the [intellectual property rights] at top."

In his Oval Office appearance with Bush, Hu acknowledged property rights as an issue.

On his way to Washington, Hu stopped in Seattle as a reminder of China's multibillion-dollar deal to purchase dozens of Boeing airliners manufactured there. China cites that as evidence of its interest in easing the trade gap with the United States.

"The U.S. would like to take U.S.-China relations to the next level," said Mike Green, who served as director of Asian affairs on Bush's National Security Council. "The challenge … is to show the American public that there's some result, that there's some productive output from this increasingly candid and strategic discussion between the two leaders."

Frank James of the Tribune's Washington Bureau contributed to this report.

Hu vow to Bush on currency, trade
Washington, April 20 (Reuters): Chinese President Hu Jintao pledged to President George W. Bush today that China would make its currency more flexible and take other steps to reduce a huge trade surplus with the US.

After a pomp-filled White House welcoming ceremony complete with a 21-gun salute and full military honours, Bush and Hu held less than an hour of talks. Both said their bilateral relationship had matured to the point where they could discuss differences openly.

“He tells me what he thinks, and I tell him what I think, and we do so with respect,” Bush said.

Hu said China wanted to boost its domestic demand and did not seek an excessively large trade surplus.

Washington would like to see China revalue its currency, the yuan, which it regards as seriously undervalued against the dollar. That would allow US exporters to compete more effectively in the Chinese market and help reduce a trade deficit that reached $202 billion last year. Hu said China would continue to improve the yuan’s exchange rate, although he gave no specifics.

Bush, Hu set for talks

Posted online: Friday, April 21, 2006 at 0006 hours IST

   


WASHINGTON, APRIL 20: President George W Bush and Chinese President Hu Jintao will raise concerns about trade, currency, Iran and Taiwan on Thursday, but analysts say the White House meeting is unlikely to yield any significant agreements. Rather, it will give both leaders an opportunity to show their constituencies they have aired contentious issues and demonstrated a willingness to talk about them.
Bush will press Hu on opening up China’s markets to American products and moving faster on making the currency more flexible to help lower the US trade deficit with Beijing that reached $202 billion last year. Hu, during a visit to a Boeing Co.. plant outside Seattle on Wednesday, said that while he wanted to make foreign-exchange markets more efficient, China was not ready for a drastic change in the value of the yuan.



Elizabeth Economy, director for Asia studies at the Council on Foreign Relations, said that while China had promised to make progress on the currency front, Hu was unlikely to make any announcement during this visit to avoid it being seen as coming “at a point of US pressure on him.”

―Reuters

Q&A: How China's Currency Policy Affects You
by Adam Davidson

Gerald Herbert
President Bush and Chinese President Hu Jintao shake hands at a session with the press in the Oval Office, April 20, 2006. Many in Congress want Mr. Bush to pressure Hu to change his country's currency policy. AP


NPR.org, April 20, 2006 ? Many in Congress want President Bush to pressure China's leader, Hu Jintao, to revalue the country's currency, called the renminbi or yuan. They say China's currency manipulation hurts the U.S. economy.

But others warn that a revaluation could raise interest rates for U.S. consumers -- and might even cause a U.S. recession. NPR's international business correspondent, Adam Davidson, explains the issues behind the currency debate.

What does it mean for a currency to be undervalued or manipulated?

Well, let's start with the U.S. dollar and the British pound. These currencies are freely traded on international markets. Their relative prices are changing all the time in response to news and business events. The dollar might go up against the pound because U.S. unemployment data showed the U.S. economy to be strong; then the dollar might go down a bit because Apple Computer bought several million dollars' worth of parts from Japan. China's currency doesn't work that way.

If not by the market, then how is the value of China's currency set?

China's central bank simply declares an exchange rate and forces, by law, all market players to observe that rate. The yuan is allowed to fluctuate a tiny bit, but not much -- and certainly not enough to accommodate the constantly changing pressures of the global marketplace. The Chinese have pegged the currency so that one U.S. dollar buys a little bit more than 8 yuan. Put the other way, one yuan is worth a bit more than 12 cents.

Most economists believe that if China's currency were allowed to trade freely, it would be worth more. No one can know for sure how much more, but leading economists put it in a range of 10 to 40 percent higher value than it is now. So, the yuan could go from being worth 12 cents to more than 17 cents.

Why should I care what the Chinese currency is worth?

By keeping the yuan artificially low in value, China is effectively giving U.S. consumers a discount on all Chinese exports. Why? Let's say a Chinese factory can make a profit selling DVD players for 800 yuan. That means they can then sell it to someone in the United States for $100. If the yuan were allowed to appreciate in value, that 800 yuan DVD player might suddenly cost, say, $115. If an American factory makes a similar player for $110, then that change in the value of the yuan can make the difference between business success and failure for the U.S. manufacturer.

So, by keeping its currency undervalued, China is discounting its own exports. That's good for U.S. consumers, who get to buy cheaper clothes and electronics and other items. But it's horrible for many U.S. manufacturers who find they can't compete with low Chinese prices. Some U.S. manufacturers, though, have adapted by buying many component parts at a lower cost from China. The ability of a manufacturer to adapt depends on the company and the product -- and even on the level of globalization in that industry.

What would happen if China does allow the yuan to appreciate?

Many domestic manufacturers argue that if China simply revalues its currency, U.S. factories would flourish, and U.S. workers would have more and better-paying jobs. Most observers, though, say that's unlikely. While some manufacturers in some sectors would certainly benefit tremendously from a Chinese revaluation, many others would see little benefit.

In reality, that 800 yuan DVD player would not suddenly go up to $115 if China revalued its currency by 15 percent. China's government would likely cut taxes to keep their manufacturers competitive. The manufacturers themselves could also absorb some of the cost increase.

And the revaluation wouldn't have an impact on other costs of Chinese-made goods, such as shipping and advertising. In short, that DVD player might still be cheaper than the U.S. model, even with a Chinese revaluation. It's important to remember that China's exchange rate is only one factor in a highly dynamic global economy.


Does it matter at all if China's currency is revalued?

It matters a lot, but more in the long term than in the short term. Except in a few special cases, few workers or factories will see a sudden change of fortune in the days, weeks and months after a revaluation. However, over the coming years and decades, a revaluation of China's yuan and an eventual move to a fully floating currency would make the global economy healthier and better able to adapt to changing economic circumstances.

I've heard that China's current money policy helps keep interest rates low for U.S. consumers. Why is that?

China's central bank needs to constantly buy U.S. Treasury bonds. It's for technical reasons: Basically, to keep its currency fixed against the U.S. dollar, China must promise to be able to redeem one U.S. dollar for every 8 yuan. As China's economy grows, it must buy more and more U.S. currency to meet the growing number of yuan.

Because China keeps buying U.S. Treasury bonds, the Treasury Department is able to keep long-term interest rates lower than they would be otherwise. (If China weren't such a big buyer, the U.S. Treasury might need to raise rates to attract other investors.) Since Treasury bonds are the benchmark for most long-term debt, those lower rates extend to credit cards and mortgages.

Those low mortgage rates have fueled a dramatic housing boom, raising the price of many homes. All those inflated home prices have injected countless billions of dollars into the U.S. economy. Americans are flush with home equity and cheap debt.

So does that mean that changing China's money policy could hurt the U.S. economy?

A revaluation could cause an economic slowdown, even a recession in the United States.

Now, if China revalues its currency abruptly, it won't have to buy so many Treasury bonds. As a result, mortgage and credit-card interest rates could jump upwards -- which means U.S. consumers would stop spending so much money. Stores and banks would be hurt. U.S. and Chinese factories wouldn't be able to sell their products, so they'd shut down or lay off workers. It could bring a self-reinforcing downward economic spiral.

Is it best to just do nothing?


In short, no. Most economists and policy makers in the United States and in China agree that, eventually, China must revalue its currency, or else global imbalances (America's $200 billion annual trade deficit with China) will grow too large.

There is a wide difference of opinion over how quickly China should revalue and what other measures need to happen to prevent painful economic costs. It is certainly theoretically possible to make the right adjustments in the right way so that both countries keep growing. It's also possible to do it completely wrong.

China's Internal Crisis
(Page 1 of 2)

April 20, 2006




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(AP / CBS)


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But nowhere does the image of China as the Next Big Threat jar with reality more than in China itself, where economic, social and environmental upheaval has turned the country into a caldron.
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(The Nation) This column was written by Stephen Glain.
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It is a measure of how all-consuming the Bush Administration's quest to transform the Middle East is that this week's visit by Chinese President Hu Jintao will be denied the spotlight it deserves. While Afghanistan smolders, Iraq burns and Iran shuffles into America's cross-hairs, only a handful of constituencies understand or seem to care that Washington's relationship with Beijing is vulnerable to manipulation by the Pentagon.

The Defense Department has met its long-term enemy, and it is China [see Michael T. Klare, "Revving Up the China Threat"]. The Pentagon's latest budget, together with its Quadrennial Defense Report released in February, heralded the Yellow Peril in support of every manner of cold war-era weaponry, from the Virginia class nuclear submarine to the F-22 Raptor fighter jet. Even Defense Secretary Donald Rumsfeld has tried to limit, or even kill, some of these programs. And while thoughtful parties in Beijing may understand that these outdated systems are nothing more than job mills for key legislative districts, it gives hawks in China leverage to push for their own arms buildup.

The Pentagon's vision of China as a dangerous hegemon diminishes the farther one gets from the Beltway Biosphere. In the Middle East and Africa, the Chinese model for economic development

Notes On The News
The Real Deal On China
Paul Maidment, 04.20.06, 1:09 PM ET



President Hu Jintao has to return to China after his trip to Washington having reassured America that China's rise as an economic and military power poses no threat to anyone.

His host, President George W. Bush, has to get much more out of the visit. He has to forestall his growing critics in Congress from using China as another rod to beat his presidency.

China's swelling $200 billion trade surplus with the U.S. and the role of the yuan's exchange rate, held artificially low to promote its exports, according to China's congressional critics, has become the focus of this debate.

But many in Congress are barking up the wrong tree in hectoring China to unpeg its currency against the U.S. dollar.

While in the aggregate China looks like a big economy with big growth rates, big export numbers and a big trade surplus with the U.S., in reality it is a collection of disparate economic regions--and always has been.

Some of those regions, notably on the coasts, are growing at breakneck speed on the back of light manufacturing exports. But others, in the interior, are stagnating.

That is of great concern to the authorities in Beijing. There is growing social unrest in the countryside, especially in the poor western part of the country. But violent protests are on the rise in all rural areas.

And anyone who knows China's history realizes what a political hot button that is for Beijing. The overthrow of China's ruling dynasties has always started with uprisings in the countryside.

How does this play into the currency question? Directly--but in a way few in the U.S. realize.

Hand-wringing congressmen berate China for keeping the yuan pegged to the dollar because they think it is intended to keep China's goods cheap in foreign markets, giving China's companies an unfair advantage over American competitors and swelling the U.S.'s trade deficit with China.

From former Fed Chairman Alan Greenspan down, economists say there is far, far more to balancing that trade deficit than merely revaluing the yuan. But Beijing is not so concerned about growing exports right now. Indeed, it wants to cool the pace of export-driven growth.

Instead, its currency imperative is to protect the vast network of bankrupt but job-providing heavy industries that Mao Zedong scatted across China's countryside. They would be destroyed by import competition if the yuan was revalued.

That would exacerbate the social disruption and violent protests breaking out in record numbers in China's poorest regions. Beijing won't countenance that level of political unrest.

That is the political imperative that drives China's exchange-rate policy right now, regardless of how much atavistic chest thumping comes out of Washington, either while Hu is here or after he has left.

5.45pm

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Bush meets Chinese president

David Fickling and agencies
Thursday April 20, 2006


The Chinese president, Hu Jintao, met his US counterpart George Bush today, in a first official visit to Washington that comes amid tensions over trade, human rights and the status of Taiwan.
A Falun Gong protester broke through security cordons to heckle Mr Hu during his opening speech, saying that his "days are numbered".

Other supporters of the spiritual movement gathered around Washington, banging gongs and waving banners accusing Mr Hu of genocide and running labour camps.


Mr Bush admitted the difficulties in the US-China relationship during his welcoming speech on the White House lawn.
"As the relationship between our two nations grows and matures, we can be candid about our disagreements," he said. "We will address our differences in a spirit of mutual respect."

Mr Bush called on China to expand access to its markets for American companies, in words that will provide comfort for factions in Washington pressing for protectionist measures to restrain China's booming economy.

"The US and China are two nations divided by a vast ocean yet connected through a global economy which has created great opportunities for both our peoples," he said. "Our two nations share an interest in expanding free and fair trade."

Mr Hu dedicated a large portion of his speech to an unusually strong reiteration of Beijing's "One China" policy, which holds that Taiwan is a breakaway province of China rather than an independent state.

The US and UN both officially support the policy, but the Bush administration has occasionally raised hackles in Beijing by its insistence that Taiwan's status cannot be resolved by military means.

The pair will hold talks later today, but analysts do not expect much formal progress from the meeting, given the welter of divisive issues between the two governments.

Elizabeth Economy, director for Asia studies at Washington's Council on Foreign Relations, said that Mr Hu's wanted to demonstrate China's increasing status by showing that he could be treated as an equal by Mr Bush.

"It's important as a reaffirmation of the relationship. Both President Bush and President Hu are committed to stability in the relationship and to moving forward," she said.

The tensions over the meeting even extended to arcane issues of protocol, with US and Chinese officials differing over whether to regard the trip as an official visit - as Washington describes it - or a state visit, a more distinguished title preferred by Beijing.

A law put before the US senate last month would impose tariffs of up to 27.5% on Chinese imports to force Beijing to revalue its currency, a move which some critics see as crucial to closing the yawning trade gap between the US and China.

The US currently imports $202bn (£113bn) more goods and services from China than it exports to the country, the largest deficit the US has ever recorded with another country.

US critics claim the imbalance has led to a loss of more than three million US manufacturing jobs since 2001, and say the Chinese government is exacerbating the problem by keeping its currency undervalued against the dollar.

China's central bank introduced a limited "managed float" of the Yuan last July, since when it has gained more than 3% against the dollar.

But US critics say it is still valued around 40% too low, and want the Yuan to be freely floated on international currency markets.

The wider concern is China's emergence as a world economic power. By some measures China is now the world's second-biggest economy, $8,200bn compared to $12,400bn for the US, and some estimates even expect it to overtake the US some time between 2015 and 2050.

Official figures released today show China's economy growing by 10.2%, prompting a spokesman for the country's official statistics bureau to voice fears about the economy overheating from the rate of export-driven growth.

Mr Hu's visit to the US capital came after a two-day trip to Washington state in the Pacific north-west, where he visited iconic US businesses including Boeing, Microsoft and Starbucks.

China's interests are well illustrated by the fact that Mr Hu spent as long visiting American businesses as he will spend visiting the US government, and by the fact that he will continue his world tour with visits to Saudi Arabia and Nigeria to discuss energy cooperation.

China's sensitivity over Taiwan is likely to have been heightened by a carefully-timed series of moves by Taiwan's president Chen Shui-Bian today.

He met five Chinese pro-democracy campaigners and authored a comment article in the Wall Street Journal Asia stating that China's increasing strength necessitated compensating moves by Taiwan. The guarded remarks could be interpreted as accepting an increase in political tensions between the countries.

Other issues likely to be on the table at the meetings include restraining apparent attempts by North Korea and Iran to acquire nuclear weapons, tackling China's human rights record on freedom of speech and freedom of religion, and clamping down on copyright piracy by Chinese companies.

Hu pledges more steps on trade
President Bush and Chinese President Hu Jintao in the Oval Office of the White House, April 20, 2006. (REUTERS/Jason Reed)
April 20, 2006



WASHINGTON (Reuters) - Chinese President Hu Jintao pledged to President George W. Bush on Thursday that China will make more trade concessions and does not seek an excessive trade surplus with the United States.


Sign up for: Globe Headlines e-mail | Breaking News Alerts After talks between the two leaders at the White House Oval Office, Bush said he hoped China would allow its yuan currency to appreciate in order to improve the climate for U.S. exports.

Hu said China has taken some steps to improve the trade climate and would do more, specifically on trying to stem the illegal piracy of American software and DVDs.

In words welcomed by Bush, Hu said China pursues a policy of boosting domestic demand and does not pursue an excessive trade surplus.

Hu also said he believed U.S.-Chinese trade frictions can be resolved through negotiations on an "equal footing."

Hu urged the United States to relax controls on high-tech exports as a way to improve the U.S. trade deficit with Beijing.

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Bush wants more China currency action

April 20, 2006 17:26
US President George W Bush has called for China to boost the value of its currency. This follows talks with Chinese President Hu Jintao at the White House today.

'We would hope there will be more appreciation of their currency,' Bush told reporters.

China carried out a small revaluation of the yuan currency in July last year. But the US administration has called for stronger action as the US had a massive trade deficit with China of more than $201 billion in 2005.

China's Hu pledges more steps on China-US trade
Thu Apr 20, 2006 12:08 PM ET
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WASHINGTON, April 20 (Reuters) - Chinese President Hu Jintao pledged to President George W. Bush on Thursday that China will make more trade concessions and does not seek an excessive trade surplus with the United States.

After talks between the two leaders at the White House Oval Office, Bush said he hoped China would allow its yuan currency to appreciate in order to improve the climate for U.S. exports.

Hu said China has taken some steps to improve the trade climate and would do more, specifically on trying to stem the illegal piracy of American software and DVDs.

In words welcomed by Bush, Hu said China pursues a policy of boosting domestic demand and does not pursue an excessive trade surplus.

Hu also said he believed U.S.-Chinese trade frictions can be resolved through negotiations on an "equal footing."

Hu urged the United States to relax controls on high-tech exports as a way to improve the U.S. trade deficit with Beijing.