Hu's U.S. visit sets new tone but tensions remain

CHICAGO Sat Jan 22, 2011 6:06am EST

1 of 35. Chinese President Hu Jintao shakes hands with a student while visiting a classroom at the Walter Payton College Preparatory High School in Chicago during the final day of his U.S. visit, January 21, 2011.

Credit: Reuters/M. Spencer Green/Pool

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CHICAGO (Reuters) - Chinese President Hu Jintao headed home on Friday after a U.S. visit both sides declared a success, but which left questions over how the world's top two economic powers will manage future frictions.

Hu's visit, described by analysts as the most important U.S.-China meeting in 30 years, hit the right diplomatic notes with the pomp of a White House summit, pledges of greater cooperation and $45 billion in new business deals.

Obama, who is pushing to create jobs and beat back an unemployment rate riding at 9 percent, said the visit would help open China's markets to more U.S. exports and lead to up to 235,000 new jobs for U.S. workers.

"We want to open up their markets so that we've got two-way trade, not just one-way trade," Obama told General Electric Co workers on a visit to Schenectady, New York on Friday.

But while Obama touted new access to Chinese government contracts and secure intellectual property rights, he made little headway on China's currency policy -- which analysts say has helped build Beijing's U.S. trade surplus to close to $270 billion in 2010 by artificially undervaluing the yuan.

"On the currency issue, President Hu gave nothing, but no one should have expected a breakthrough," said Elizabeth Economy, a China expert at the Council on Foreign Relations.

"China will move in its own way on the issue, according to what it perceives as its own economic interests," she said.

Throughout his visit Hu sought to show that U.S. and Chinese economic interests are largely aligned. He spent the final day of his U.S. tour in Chicago where he visited a school and a business exhibition to press the message that China represents opportunity for U.S. business.

"I'm confident that bilateral China-U.S. investment in the next year or two will grow even faster and help the United States with employment growth," Chinese Commerce Minister Chen Deming told the business forum as more deals were signed.

BETTER TONE

Analysts said Hu's trip was smooth enough to help improve relations after a flare-up in tensions last year over issues including trade, North Korea and Internet censorship.

The world's top two economies are already closely linked and China is the largest foreign holder of U.S. government debt.

Obama -- whose 9-year-old daughter Sasha tried out her Chinese language skills with Hu -- has said the two countries will help shape the 21st century.

Chinese media lauded the trip as a "historic masterstroke" to ease tensions. State television gave blanket coverage to the ceremony of Hu's state dinner and welcome at the White House, reflecting a desire for China's leader to be portrayed as a valued and honored player on the world stage.

U.S. officials touted Hu's remark at a joint news conference that more needs to be done on human rights but his comments were largely left out of Chinese news coverage.

Hu did not comment publicly about the yuan during the trip and Chinese officials said Beijing would stick to its policy of gradual exchange rate reform.

A top U.S. Treasury official said Washington is seeing progress on Beijing's commitment to let the yuan appreciate but more work is needed on that issue and other parts of the U.S.-China relationship.

KOREA BREAKTHROUGH

Obama appears to have succeeded in convincing China to press its ally North Korea to engage in talks with South Korea to try to calm mounting tension on the divided peninsula.

An Obama administration official said the United States had warned China it would redeploy forces in Asia if Beijing failed to rein in North Korea.

Seoul and Pyongyang agreed on Thursday to hold high-level military talks, the first since the North's artillery attack on the South in November.

In a Cold War echo as Hu departed, a U.S. court on Friday sentenced a Michigan man to four years in prison for trying to spy for Beijing.

Experts looking at the U.S.-China summit were cautious about the long-term prospects for dispelling mistrust and of easing strains over China's military buildup and U.S. calls for a more market-oriented exchange rate for the yuan.

For business, however, the results were more immediately tangible as China signed deals on everything from airline parts to soybean exports.

Among the deals signed, diversified manufacturer Honeywell and Haier Group, China's top home appliance maker, agreed to develop low-emission, energy-efficient products.

And Aviation Industry Corp of China set up a 50/50 joint venture with General Electric to develop avionics systems for new commercial aircraft.

U.S. Commerce Secretary Gary Locke said China could help U.S. business to meet Obama's goal of doubling American exports by 2015 but cited "exasperation" over China's record on intellectual property rights, government decision-making and discriminatory policies.

"The bottom line is that improved implementation of China's WTO (World Trade Organization) commitments will lead to a more balanced trade relationship," Locke told the Chicago business group as the deals were signed.

(Writing by Andrew Quinn; Additional reporting by Nick Carey, Brad Dorfman, Jeff Mason, Thomas Ferraro, Ann Saphir and Mary Wisniewski and Jeremy Pelofsky, and Ben Blanchard, Zhou Xin and Michael Martina in Beijing; Editing by David Storey)

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Comments (3)
Eideard wrote:
Take the time to interview your own business correspondents. Excepting loonybird ideologues, the overwhelming sentiment was that this summit advanced commerce between the two nations more than anything similar in the past three decades.

I agree. Most investors I know – admittedly a tiny number – agree.

Jan 22, 2011 8:50pm EST  --  Report as abuse
Jeanmichel wrote:
The visit of President Hu of China has shown the great wisdom and leadership qualities of President Obama, who focussed on trade with China in order to create the much needed jobs for the Americans instead of dwelling on human rights in China or the independence of Taiwan, Tibet and Xinjiang. The Americans have nothing to gain by requesting that the dissident Liu, who is jailed in China for his criminal activities, be freed or by requesting that Taiwan, Tibet and Xinjiang be granted independence.

Jan 23, 2011 11:07am EST  --  Report as abuse
finneganG wrote:
Stop buying Chinese-made products, especially if it is a processed food for human or pet consumption.

Our food standards are being ignored and we are not being protected by the federal government. Recalls are not happening and people and pets are getting sick.

I suspect this is because the Chinese hold our purse strings and can pull when we push-complain about their imports. They saw a drastic backlash with the dog food contamination and the lead in toys issue, and now want the U.S. Government to suppress free vocalization of current Chinese product issues to guarantee continuous trade, profits, and the future buying of additional American debt.

The U.S. Government is allowing us to be poisoned. If a package of food says DISTRIBUTED BY – but has no indication of where it was actually manufactured – you can believe it was made in China and it is unhealthy and dangerous. The federal government knows this; they are the ones that passed the laws that allow U.S. distributors to get away with this practice. Add to that, the feds lack of enforcement, inspection, and regulation, and we will see additional illnesses AFTER the fact.

We have a right to be represented by our congressional electees and WE HAVE A RIGHT TO KNOW WHERE OUR FOOD IS MADE – especially if it is made and processed in the cesspool industrial parks of China.

Jan 24, 2011 10:41am EST  --  Report as abuse
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