04/10/2006, 00.00
CHINA – UNITED STATES
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Growing expectations for Hu Jintao's visit to the United States

Trade and world affairs are on the table. U.S.-China Joint Commission on Commerce and Trade meets tomorrow.

Beijing (AsiaNews/Agencies) – Chinese President Hu Jintao is scheduled to visit the United States on April 18-22. Trade and world affairs will be the main topics for discussion. In the meantime, the U.S.-China Joint Commission on Commerce and Trade (JCCT) is set to start tomorrow when a Chinese delegation headed by Chinese Vice Premier Wu Yi meets top US trade officials.

Uncertainty has ruled Sino-US relations over the decades. Washington still remains suspicious of the Communist giant and demands China play by the same economic rules—Beijing insists instead on its own rules and has increasingly taken centre stage in world affairs even though it needs good relations with the US and its allies to foster its own economic development.

For many experts, the coming summit can provide both sides with a good opportunity to jumpstart a policy of closer cooperation. For both good results can have positive repercussions at home as well. US President George Bush, who has seen popular support slip, needs something to restore his party's prospects for the upcoming November congressional elections. Chinese President Hu wants concrete results and recognition abroad to show back at home.

Trade. US trade deficit with China has gone over the US$ 201 billion mark and China now holds the largest foreign currency reserves. For Washington Beijing must change its currency policy and remove tariffs on US imports (like hi-tech, cars, computers) to lower the trade gap. Beijing so far has indicated it is only willing to increase its purchases of US goods.

Hu, who is scheduled to stop in Seattle to visit a Boeing plant and dine at the home of Microsoft founder Bill Gates, is taking some 200 representatives of 111 leading Chinese firms. China's buying spree in the US is estimated at US$ 15 billion (including 80 Boeing passenger planes), which is less than 10 per cent of the US trade deficit. Beijing is also interested in striking deals in the energy field, especially oil and nuclear, to reduce its rising energy bill.

By contrast, Beijing is not likely to budge on the exchange rate. For many experts, the yuan remains undervalued by 40 per cent and this is a major factor in China's export drive and the US trade deficit. In the absence of any move in this area, the US Congress is likely to vote a bill to impose high tariffs on Chinese goods. The vote, which was set for March 31, was postponed in light of Hu's visit.

Pending changes to the exchange rate, Washington will ask for greater openness in China's money markets in terms of both capital 'in-flow' and 'out-flow'. This might reduce China's foreign exchange reserves, encourage domestic Chinese consumption and reduce pressure on the yuan.

Counterfeit goods. For years now, the US has demanded Chinese authorities take "specific action" against counterfeiting, especially of music, movies and software made in the US. At least 90 per cent of software products sold in China are counterfeit according to US companies depriving them of billions of dollars in lost sales. Concrete steps to deal with the problem should already be announced tomorrow at the Sino-US trade summit.

International politics. Bush and Hu will meet on April 20 in Washington to talk about terrorism and nuclear proliferation. The US remains frustrated by Iran's and North Korea's posture, but China has so far refused to close doors and impose sanctions. On the other hand, it would like to see the US make a public statement and offer private reassurances that it would discourage Taiwanese President Bush Chen Shui-bian from further moving the island towards independence. Despite its criticism of Chen's moves, the US has so far done nothing against them.

Asia. Beijing continues its strategy of marginalising the US in Asia, despite the US's success in establishing or reinforcing ties with countries like India, Indonesia or Mongolia. Meanwhile, Japan is stressing the importance of the US-Japanese relationship (as well as that with Australia and New Zealand) based on common values (like democracy, freedom, human rights) as Chief Cabinet Secretary and Prime Ministerial hopeful Shinzo Abe pointed out recently.

Democracy, freedom and human rights. Economic issues seem to have overshadowed human rights lately. Back in November Bush called for greater respect of human rights during his visit to China but only at the end of his trip and not in direct talks with Chinese leaders. It remains to be seen whether charges against US IT companies levelled in the US Congress will be forgotten. Some of the largest US IT companies started in fact collaborating with the Chinese police to stifle online free speech by revealing names of cyber-dissidents who were arrested.

Illegal immigrants. "We've reached a meeting of the minds and a common approach on the issue of repatriation of illegal migrants with China," U.S. Homeland Security Secretary Michael Chertoff said. There currently are some illegal 39,000 Chinese immigrants in the United States. (PB)

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