Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 454 Sun. September 04, 2005  
   
Business


China president hopes to ease trade frictions on US visit


Chinese President Hu Jintao heads to the United States next week hoping to patch up economic ties strained by spats over China's ballooning trade surplus, currency policy and surging textile shipments.

Hu starts his visit on Sept 5, just a few days after talks to hammer out a textile agreement ended in failure, with both sides saying there were wide differences in their positions.

The breakdown of negotiations comes as US lawmakers are stepping up criticism of China's economic policy, saying July's yuan revaluation was too small and Beijing needs to do more to address its bilateral trade surplus, which is on track to pass last year's $162 billion.

"We could have a substantial trade war between the two big-growth locomotives of the world economy within the next few months," said Fred Bergsten, director of the Washington-based Institute for International Economics.

"The lack of adjustment of China to its huge and growing trade surplus will lead in the direction of a major clash between the United States and China that can happen in the next two to three months," Bergsten said in Tokyo.

US officials have also voiced concern that the yuan is still undervalued, despite a 2.1 percent revaluation in late July that Beijing says was just the first step in a long process of currency liberalisation.

Even with US pressure, notably in the form of a bill authored by Senator Charles Schumer, a New York Democrat, and Senator Lindsey Graham, a South Carolina Republican, that would threaten China with a 27.5 percent tariff on all its exports, analysts say Beijing will move at its own pace.