China to serve Bush with its own trade complaints

Updated at 1.00pm:
The mainland has absorbed a barrage of criticism from the United States on the trade front in recent years, but the rising Asian giant will be on the front foot when US President George W. Bush visits this weekend.

Mr Bush is certain to serve Mr Hu with a list of well-versed trade complaints, such as China’s tightly controlled currency exchange regime, intellectual property rights violations and the deepening bilateral trade imbalance.

“For [Mr] Bush these are probably the most important issues,” said Shi Yinhong, director of the Centre of American Studies at People’s University in Beijing.

President Hu Jintao, who will host Mr Bush in Beijing from Saturday evening to Monday, will undoubtedly want to ease trade frictions.

But he will also be keen to highlight his own growing concerns about Washington’s trade protectionism and other issues, according to Mei Xinyu, a researcher for the Ministry of Commerce.

“The other side of the coin of the trade imbalance story... is the US itself is sick, but it urges others to take medicine,” Mr Mei said.

“If it were me, I would like to say [to Mr Bush]: ‘Please strictly follow World Trade Organisation (WTO) rules, please keep your promises to the WTO. Do not be inconsistent in your words and do not use double standards’.”

Beijing and Washington this month resolved one protracted trade dispute, over the surge of Chinese textiles to the United States following the end of a world quota system on January 1 this year.

Both sides hailed the three-year deal that sets new quotas on Chinese textile exports to the United States as being good for trade stability.

But Beijing at the same time expressed clear unhappiness with what it believes is Washington’s bending of the rules to suit itself.

“Developed countries should understand that free trade is the overriding trend and quota restrictions are inappropriate,” Commerce Minister Bo Xilai said.

With the US trade deficit with China expected to punch through 200 billion dollars this year — Washington’s protectionism is becoming a growing concern among Chinese politicians and industry chiefs.

“For China also these kind of issues are very important because if protectionism really accumulates too much it could hurt the Chinese economy,” said the People’s University’s Shi.

That is particularly worrisome for the ruling Communist Party, which must keep the economy expanding quickly to provide jobs and close a widening gulf between rich and poor.

The poverty gap is a problem recognised by Hu as the most serious threat to social stability, and potentially the party’s grip on power.

And against a backdrop of systemic woes that range from corruption and unemployment to a weak financial system and a fledgling legal structure, China is irked by US demands to speed up reforms when it says it is adopting the rules of global capitalism as fast as domestic conditions permit.

Why, Beijing has repeatedly asked, does the United States, with an economy that is some seven times the size of China’s US$1.6 trillion (HK$12.4 trillion), not take steps to fix its own economic backyard?

Another way to balance the scales would be for the United States to relax its tight control on exports to China of hi-tech equipment, Chinese Vice-Minister of Commerce Liao Xiaoqi said at a China-US trade conference this week.

Wu Xinbo, an expert on Sino-US diplomacy at Shanghai’s Fudan University, said China should seize the opportunity of the Bush visit to make its stance more clearly heard on the technology exports.

Mr Wu also said Mr Hu should urge Mr Bush to calm US political tensions over Chinese companies moving into sensitive industries such as energy, referring to Capitol Hill’s rejection this year of China National Offshore Oil Corp’s US$18-billion bid for Californian energy group Unocal.

“[China] should urge the US to loosen controls on high technology exports to China, and urge the US to better control itself when it comes to security concerns on economic co-operation between the two countries,” Mr Wu said.