Chinese School - US, China to meet to ease trade tensions

BIZCHINA / Top Biz News

US, China to meet to ease trade tensions

(AP)
Updated: 2007-05-19 14:19

WASHINGTON - The Bush administration said Friday it hopes for agreements
on airline flights, use of U.S. pollution-control technology and other
subjects when a high-level delegation from China visits next week for a
second round of talks aimed at lowering trade tensions.

Alan Holmer, the president's special envoy for China, said that the
administration hoped to strike deals increasing the number of commercial
airline flights between the two nations, both for air cargo and
passengers, and improving energy efficiency in China through the use of
U.S. technology to control pollution.

The administration is also pushing for a deal that would allow U.S.
financial service companies and other foreigners to buy stakes of up to
49 percent in Chinese banks, up from a current 25 percent cap. The
administration would also like the Chinese to relax limits on foreign
ownership of Chinese securities firms.

In advance of the discussions next week, the Chinese announced Friday
that they were allowing a slight widening of the trading band for their
currency, the yuan.

"The Treasury's view is that this is a useful step towards greater
flexibility and an eventual float of the currency," Holmer said.

He said the administration had not received any assurances from the
Chinese about how quickly they will move to allow the currency to rise in
value against the dollar.

Sen. Charles Schumer, one of the most vocal critics of China's trade
policies, said if China's announcement does not lead to a significant
revaluation of the yuan, it will not provide any help in lowering
America's huge trade deficit with China and will not stave off pressures
in Congress to do more.

"This is a nice gesture, but in the past, most of their gestures have not
produced any concrete change," Schumer, D-N.Y., said in a statement.

Underscoring the growing unhappiness in Congress, a bipartison group of
42 House members filed a petition on Thursday asking the administration
to bring a trade case against China on the grounds the country is
unfairly keeping its currency low to gain trade advantages.

Asked about the case, Holmer on Friday said the office of U.S. Trade
Representative Susan Schwab would review the request under normal
procedures. The administration has turned down three other petitions
filed against China's currency practices.

The meetings next Tuesday and Wednesday will be the second session of the
Strategic Economic Dialgoue, which the two countries launched in December
in Beijing. It gets high-level officials from both nations together twice
a year in an effort to resolve economic strains between the two nations.

Chinese officials are also expected to meet with President Bush and have
discussions on Thursday with key lawmakers, where they are likely to get
an earful of complaints about Chinese trade practices which American
companies see as unfair.

The U.S. team will be led by Treasury Secretary Henry Paulson and will
feature top officials from 10 Cabinet-level departments. Federal Reserve
Chairman Ben Bernanke will also take part as he did during the first
round of talks in Beijing.

The Chinese delegation, which will be led by Vice Premier Wu Yi, is
expected to include 14 Cabinet-level ministers.

The administration is hoping to achieve results through the strategic
talks as a way of easing pressure in Congress, which is considering a
number of bills that would impose economic sanctions on China.

Paulson predicted there would be progress next week even in an
environment where the United States will have elections in 2008 and China
has elections in the fall to fill seats on their powerful Politburo.

"In an environment like this, it's hard to make change and progress, but
we're going to get progress," Paulson said Thursday on the PBS' "News
Hour with Jim Lehrer."

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