Schooling China in the American Way

He questioned whether a revaluing of China's currency would create any jobs in the United States.

A man in a blue suit demanded to know how many U.S. senators -- now moving toward a vote on a trade bill that could have great consequences here -- have ever visited his country. "Many Americans are not very well informed of the real situation in China," he said.

Schumer, Graham and Coburn are in China for five days for what they say is an examination of the forces at play before they decide whether to proceed with a vote on the bill at the end of the month. With China's President Hu Jintao scheduled to visit the United States in April and a U.S. Treasury Department report in the works that could brand China a currency manipulator, the Schumer-Graham bill has become a key front in an increasingly tense trade relationship between the countries. It would apply 27.5 percent tariffs to all Chinese-made goods if China does not substantially revalue the currency.

The bill has gained momentum as China's trade surplus with the United States has grown, swelling to $200 billion last year. But many economists assert that even a significant revaluation would do little to alter the trade balance, noting that many of the goods China exports, such as clothing and furniture, have not been made in large quantities in the United States for years. Others called the trip political posturing.

But the reception the senators are receiving attests to the gravity of the issue for China's leaders, who are cognizant of the angry mood in Washington. The senators dined Wednesday night with Zhou Xiaochuan, the governor of the People's Bank of China. They were to meet Thursday with Vice Premier Wu Yi.

The senators said they were here to discuss not only the currency but also China's failure to crack down on routine theft of intellectual property (from pirated Hollywood movies to counterfeit pharmaceuticals), as well as barriers to foreign investment here. The currency issue "has become a metaphor for the whole trade relationship," Schumer said.

China has been emphasizing the difficulties it faces in freeing its currencies, particularly the risk that it could slow economic growth. That message has already gained some sympathy from the U.S. visitors.

"I've learned that you've got 700 million people who need employment, that the interior of your country is not developed," Graham told the students. "I've learned in coming here that for you to change your system very quickly would be very hard for your country. I understand that better now."

Schumer and Graham said they were very impressed by assertions by Chinese officials that they have come to see a free-floating currency as being in their own interest, though they will need to move gradually. "We walk away from this meeting seeing that they are not mouthing it," Schumer said. "They believe."

The senators will also walk away with an appreciation for the pageantry that China uses to great effect in winning over visitors -- even those who come with unpleasant business. On Tuesday night, after an official dinner in the Great Hall of the People, the senators buzzed over the experience.

"It was the most awesome room," Graham said.

"It wasn't your typical Chinese food," added Schumer. "It was amazing stuff, not your usual stuff. And they went easy on us. No sea slugs. No jellyfish."

But if China's culinary achievements left a favorable impression, Schumer was less impressed by the political culture. On Wednesday, as he spoke at the university, he asked for a show of hands from those believing that "freedom is the eventual right path for China to be on." Perhaps a dozen of the 50 or so people in the room tentatively raised hands.

How many disagreed? Five hands went up. How many people were unsure? No one raised a hand, leaving a silent majority expressing no sentiment at all.

"It's still a very controlled society," Schumer said as he boarded the bus that would take him past countless new skyscrapers and on to the five-star St. Regis Hotel. "They've got a ways to go."