Beijing To Washington: No Trade Blame Game

U.S. Treasury Secretary Henry Paulson, center, with Chinese Vice Premier Wu Yi, right, and Finance Minister Jin Renqing, at Beijing's Great Hall of the People, Dec. 15, 2006. Paulson pushed China to ease currency exchange rules, appealing for help in shoring up American support for free trade. But Wu said change already was coming, and complained that the U.S. fails to understand China. (AP Photo/Greg Baker, POOL)
AP Photo/Pool
The United States and China opened a new round of high-level economic talks on Tuesday with the leader of China's delegation bluntly saying that any effort to politicize economic differences between the two nations was not acceptable.

The Bush administration was pushing for concrete results to show to an increasingly restive Congress, where lawmakers blame America's soaring trade deficits and the loss of one in six manufacturing jobs since 2000 in part on China's trade practices in such areas as currency manipulation and copyright piracy.

But in opening remarks delivered in an ornate government auditorium decked out in flags from both nations, Chinese Vice Premier Wu Yi cautioned the United States against pursuing a blame-game.

"We should not easily blame the other side for our own domestic problems," Wu said, speaking through an interpreter. "Confrontation does no good at all to problem-solving."

Wu, who gained a reputation for tough speaking when she was China's top trade negotiator, said that both sides should "firmly oppose trade protectionism." She said that any effort to "politicize" the economic relationship between the two nations would be "absolutely unacceptable."

Wu and her delegation were scheduled to meet behind closed doors on Thursday with key leaders of Congress, including House Speaker Nancy Pelosi, who has been a vocal critic of China's human rights policies. Lawmakers are pushing a variety of bills that would impose economic sanctions on China in the wake of a trade deficit with China that last year hit $232.5 billion, accounting for one-third of America's total record deficit of $765.3 billion.

Treasury Secretary Henry Paulson created the Strategic Economic Dialogue last year as a way to get the country's top policymakers together twice a year to achieve results that will ease trade tensions. The first meeting was held in Beijing last December.

Breakthroughs at this meeting were expected in the area of cutting tariffs on sales of American energy technology products and services in China and increasing U.S. airline passenger and cargo flights to China.

However, success in another area — getting China to boost the stake that American firms can own in Chinese financial service companies — seemed less certain. The current cap on foreign ownership of Chinese banks is 25 percent.

The two sides were also expected to review the issue of food safety, highlighted by the deaths of pets after eating pet food made with tainted wheat gluten that had been imported from China.

American manufacturers contend that China is manipulating its currency to keep it undervalued against the dollar by as much as 40 percent, making Chinese goods cheaper in the U.S. market and American products more expensive in China.

But there was no expectation of further progress in this area after China's surprise announcement last Friday that it was slightly widening the range its currency could move against the dollar in a single day from 0.3 percent to 0.5 percent. Critics were unimpressed by the small widening of the currency band.

Paulson was leading a U.S. delegation that includes top officials from 11 Cabinet-level agencies and Federal Reserve Chairman Ben Bernanke. Wu's team includes 14 Cabinet ministers and Zhou Xiaochuan, head of China's central bank.

There were reports that China considered calling off this round of talks after the Bush administration, in an effort to pre-empt tougher actions in Congress, imposed penalty tariffs on Chinese paper products in a fight over government subsidies, and filed cases against China before the World Trade Organization complaining about lax enforcement of copyright protections for American movies, music and other products.

China in recent days has made a number of moves in an effort to defuse American unhappiness. In addition to announcing the slight change in its currency band, China earlier in the month said it would purchase $4.3 billion in American high-technology products and in recent days announced that it would invest $3 billion of its $1.2 trillion in foreign currency reserves in Blackstone Group LP, the second-largest U.S. private equity firm.