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China Premier to Target Textiles, TVs in Trade Talks Dec 4, 3:42 am ET By Scott Hillis BEIJING (Reuters) - Chinese Premier Wen Jiabao will likely talk tough on textiles and televisions when he heads to the United States this week. But he will also carry a softer, broader message that will emphasize the importance of healthy economic ties between the world's fastest growing major economy and its biggest. Trade frictions flared last month when the United States capped some imports of Chinese textiles and imposed tariffs on televisions. A surprised China hit back by delaying trips to shop for U.S. soybeans, wheat and cotton, and said it could impose duties on some American goods. "Wen has to push back on quotas and tariffs because he has to show that he is fighting for the jobs of several hundred million people back home," said Robert Eng, director of Babson College's Asia Institute. So far the dispute is more symbol than substance. The textile caps and TV tariffs affect only a tiny sliver of Chinese exports to the United States. Total trade between China and the United States rose to $128 billion in the first nine months of 2003, up more than 20 percent from a year earlier, according to U.S. figures. But the commerce is lopsided, with China seen recording a surplus of about $120 billion this year, also up a fifth over last year's. Economists say the picture is more complicated. Half of China's exports are cranked out by companies funded with foreign investment, and U.S. firms such as General Motors have made billion-dollar bets on the Chinese economy. U.S. companies have pumped a total of nearly $40 billion into China, making the United States the second-biggest investor in the country after Hong Kong, Chinese figures show. Wen "will be reinforcing to big players in key sectors...that China is both a business-friendly place to operate or manufacture as well as a leading market in the world for products and services," Eng said. PEG TOO LOW? With China's economy on track to grow at least 8.5 percent in 2003 over last year, the country is ravenously buying goods from abroad. China says it bought $27.6 billion worth of U.S. goods from January to October, up nearly 26 percent from a year earlier and making the United States China's fourth-biggest supplier after Japan, Taiwan and South Korea. But Wen, accompanied by Ma Kai, head of the powerful State Development and Reform Commission, and Vice Commerce Minister Ma Xiuhong, will also find himself playing defense. China has come under fire from the United States and other countries for dragging its feet in opening its markets wider to foreign competition. Some politicians and manufacturing groups have also zeroed in on China's fixed currency policy. They argue the yuan's peg to U.S. dollar is too low, thus making Chinese exports unfairly cheap at the expense of hundreds of thousands of U.S. manufacturing jobs. "I think, at the end of the day, what the U.S. is trying to get China to do is move on the renminbi front," said Hong Liang, a Goldman Sachs economist in Hong Kong. Wen will most likely reiterate China's standard defense that while a free-floating currency is an eventual goal, economic stability and job creation are higher priorities. Trade, however, may be eclipsed by hot political issues such as Taiwan. China says the island, self-governed with U.S. backing since the 1949 end of China's civil war, is a rebel province and threatens to invade if it declares independence. (Additional reporting by Tamora Vidaillet) |
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