China Action Expected Before Meeting
Eager to smooth the way for next week’s visit by Chinese President Hu Jintao, officials from that country are expected to lift a ban on U.S. beef and move more aggressively to shut factories that pirate American movies and software, analysts say.
Those announcements could come after a closely watched meeting in Washington today attended by Chinese Vice Premier Wu Yi, U.S. Trade Representative Rob Portman, Commerce Secretary Carlos M. Gutierrez and Agriculture Secretary Mike Johanns.
The workings of the U.S.-China Joint Commission on Commerce and Trade don’t usually draw much attention outside trade circles. But with the U.S. trade deficit with China topping $200 billion and anti-China sentiments in Congress running high, today’s meeting could be crucial to the success of Hu’s first U.S. visit since he assumed the presidency in 2003.
President Bush raised the stakes Monday in a speech at Johns Hopkins University where he urged Hu to address concerns over piracy and China’s currency policy to help “Americans understand the importance of a free trading world.”
U.S. exporters say the yuan is undervalued by as much as 40%, giving Chinese exporters an unfair advantage. The yuan is not on today’s agenda -- which is focused on trade -- but is expected to be discussed during Hu’s visit.
To smooth Hu’s way, officials in Beijing have orchestrated a $15-billion buying mission, the largest campaign of its kind. The stock price of Boeing Co. rose Monday on optimism that the aerospace firm would sign contracts in Washington today for as many as 80 new-generation 737s, part of a deal announced last year in China.
Last weekend, China inked $300 million in deals with U.S. cotton firms including Calcot Ltd., the California cotton marketing cooperative.
Trade experts said it was difficult to assess the effect of this government-orchestrated shopping spree because many of the deals being signed would have occurred anyway.
U.S. officials said China must offer up some concrete steps on piracy and market access or risk possible trade penalties and a chilly welcome for Hu.
China, where copies of new movies are sold on the street for about $1, is one of the world’s leading sources of pirated goods. Hollywood studios, whose movie distribution rights in China are severely restricted, say they lost $280 million in potential revenue last year to illegal copying.
At a forum in Los Angeles last week, Zhang Xiaoqiang, vice chairman of China’s National Development and Reform Commission, said the United States could boost exports to China significantly by easing controls on products that were widely available from Europe or Asia. The U.S. restricts sales of high-powered computers, machine tools and other sensitive technology to China.
Trade experts said the U.S. was not likely to sell China certain high-tech products because Washington was wary of Beijing’s growing military budget and lax weapons controls. In fact, they said the United States was considering increasing restrictions on exports to China of so-called dual use technology.
China is promising to do better to rein in pirates of movies and software. Under pressure from the U.S., a number of China’s leading computer manufacturers have agreed to install legal software on their machines. Last week, TCL Group and Tsinghua Tongfang Co. took such a step, announcing plans to purchase $200 million worth of Microsoft Corp. software over the next three years. Lenovo Group, which purchased IBM Corp.’s Thinkpad division last year, recently made a similar pledge.
By getting Chinese computer makers representing “40% to 50%” of the domestic market onboard, the U.S. government hopes to “drive out the illegal operators,” a U.S. official explained. In addition, the U.S. wants the Chinese government to ensure that all of its agencies purchase legal software.
U.S. cattle ranchers are hoping for good news from today’s meeting. China is expected to lift a ban on U.S. beef imports imposed in December 2003, according to Jason Kindopp, a China specialist with Eurasia Group in New York.
China was one of 72 countries that closed its doors to U.S. beef after the discovery of a cow infected with bovine spongiform encephalopathy, also known as mad cow disease.
Such a move would help U.S. exporters, who still face restrictions in Japan, South Korea and 18 other countries. China was the U.S.’ seventh-largest export market by value in 2003, purchasing $120 million worth of beef products, according to the U.S. Meat Export Federation, a trade group.
