Visit of Chinese President Hu leaves trade deficit in limbo

President Bush's much-anticipated meeting with Chinese President Hu Jintao appears to have done little to address the $202 billion U.S. trade deficit with China or other sources of economic tensions between the two superpowers.

Administration officials attempted to put a positive spin on the 90-minute, April 20 meeting, which followed a White House arrival ceremony marked by several incidents that might have been funny if the stakes of the Chinese president's first official visit to Washington hadn't been so high.

Manufacturing executives had been hopeful that President Bush, suffering from low approval ratings, would use the talks to wring some concessions from Hu and help himself regain a degree of the popularity he enjoyed in his first term. But the administration came away with little to show for its efforts.

“The president failed to make any significant progress in his talks with Hu,” said Kevin L. Kearns, president of the U.S. Business and Industry Council, which represents 1,500 small- to medium-sized manufacturing companies. “It was more of the same do-nothing-to-upset-the-Chinese approach.”

“We were really hoping that significant progress would be made so that both governments would begin to work together to address this very large trade imbalance,” said Frank Vargo, international vice president of the National Association of Manufacturers.

Shortly before the trip, the Chinese government announced that its economy grew by 10.2 percent in the first three months of this year, which was faster than the 9.9 percent growth it registered in 2005.

Chinese officials said the amazing rate of expansion (U.S. GDP typically grows 3 percent to 4 percent annually) was unintentional. “We do not want, nor are we pursuing over-rapid economic growth,” Hu told reporters before leaving Beijing for his trip to the United States.

The surge in the Chinese economy, which could translate to more exports of textiles and apparel and other manufactured goods, is expected to lead to another increase in its trade surplus with the United States, which reached $202 billion last year.

U.S. manufacturing groups say much of the trade imbalance is due to China's continued refusal to allow more than a token devaluation of its currency, the yuan. Some economists claim China's pegging of the yuan to the dollar makes Chinese exports 40 percent cheaper than products in the United States.

Sen. Charles Schumer, D-N.Y., has threatened to introduce legislation that would impose sanctions on China until it devalues the yuan, but had agreed to delay it until after Hu's visit to the United States.

President Bush said Hu realizes the trade deficit is a major concern for his administration and other Americans.

“He recognizes that a trade deficit with the United States, as substantial as it is, is unsustainable,” the president said during a joint photo opportunity with Hu in the Oval Office.

Bush had to begin the meeting with an apology after a Falun Gong supporter who was granted a press pass heckled Hu during the arrival ceremony. Chinese officials reportedly had warned the U.S. Protocol Office to be careful who it admitted to the event. (The Falun Gong supporter, Wang Wenyi, crashed another media event in Malta five years ago and got into an argument with former president Jiang Zemen.)

A White House emcee also announced the Chinese national anthem as that of the Republic of China, the official name of Taiwan, the island that the People's Republic of China claims as its own.

But Kearn said those missteps were nothing compared to the administration's failure to seize the meeting as an opportunity to extract more from the Chinese than “deceptive Chinese promises and more tinkering around the edges.

“Our $200-plus billion trade deficit with China is rather blunt proof that Beijing's predatory economic practices are hollowing out America's domestic industries.

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