WASHINGTON, May 22 (Reuters) - The Bush administration was ready to pull out the stops this week to try to convince a visiting top-level Chinese delegation that Beijing must speed up economic reforms to tamp down anger at its trade success.
U.S. Treasury Secretary Henry Paulson welcomed Chinese Vice Premier Wu Yi on Monday and a bevy of other senior officials, including Finance Minister Jin Renqing and central bank Gov. Zhou Xiaochuan, ahead of round two of a “strategic economic dialogue” initiated in Beijing in December.
Some 15 Chinese cabinet members were aboard the jetliner that touched down at Andrews Air Force Base — a measure of the importance both sides attach to the talks.
The top item on the U.S. agenda over the next three days will be to let Wu and her companions know that the White House is losing its ability to hold off congressional ire at a U.S. trade gap with China that hit a record $233 billion last year.
Paulson, a former Goldman Sachs chief with long-standing business ties in China, will take Wu to Capitol Hill for meetings on Wednesday and Thursday with lawmakers who are threatening tough legislation to punish Chinese imports unless the Chinese currency is allowed to rise in value rapidly.
“If we are running out of anything rapidly, it’s goodwill and trust,” warns Peter Morici, a professor at the University of Maryland and a frequent critic of Chinese trade practices.
China offered a gift of sorts last Friday, widening the band within which its currency, the yuan, trades. The measure failed to satisfy U.S. legislators who told Wu in a letter last week that Beijing needed to not only let its currency rise but also needed to stop stealing U.S. copyrights.
The yuan has appreciated only 5.8 percent since it was revalued by 2.1 percent in July 2005 and set free from a dollar peg, an amount that Paulson will again argue is not enough.
U.S. manufacturers claim it is undervalued by something like 35 percent, keeping Chinese-made goods unfairly cheap.
Official talks on Tuesday and Wednesday include sessions on opening China’s financial services markets, as well as sessions on energy and environmental issues — which are likely to yield some contracts for U.S. companies that make the equipment needed to scrub the pollutants from China’s coal-fired plants.
On Monday, the U.S. and Chinese export-import banks signed a financing agreement to cover most U.S. export sales valued at more than $20 million, a deal the Treasury Department termed one of the necessary “signposts” to demonstrate progress in the twice-a-year sessions of the dialogue with China.
The Treasury Department’s China negotiator, Alan Holmer, told reporters the coming talks should not be seen as a one-off event but rather “a management tool to manage our bilateral economic relationship as effectively as possible.”
Along with straight talk, the Bush administration is laying on a charm offensive that includes a banquet Secretary of State Condoleezza Rice is hosting for the Chinese delegation on Tuesday night.
In addition, Wu is expected to meet President George W. Bush at the White House on Thursday, ahead of a speech she delivers that night to a business audience. She may spell out China’s reasons for proceeding cautiously in moving its emerging-market economy toward a more market-driven one.
There are ample irritants between the two countries, including a spate of cases the United States recently has brought against China at the World Trade Organization and that U.S. officials say won’t be settled this week.
Instead, a WTO panel will begin hearing evidence this week in a case the United States, the European Union and Canada have brought against Chinese barriers to auto parts imports.
Washington and Beijing will consult in early June on three other cases, which involve U.S. concern about Chinese industrial subsidies and the piracy and counterfeiting of American goods.