Upbeat on Trade, Hu Offers No New Fixes for Imbalance
Thursday, April 20, 2006
SEATTLE, April 19 -- Chinese President Hu Jintao conceded Wednesday that "some problems have occurred" in the business ties between his country and the United States, but offered few, if any, specifics for solving them.
On the second day of his visit to Washington state, Hu was effusive and optimistic about the importance of trade to the future of both countries. At the same time, though, he announced no new proposals for cutting his country's huge trade surplus with the United States, revaluing its currency or limiting China's oil purchases from rogue countries such as Iran.
"The common strategic interests that bind our two countries together have not decreased; they have increased," Hu said in luncheon remarks delivered before his flight to Washington, D.C., where he will meet with President Bush on Thursday. "The various areas for our cooperation have not narrowed; they have widened further."
He noted that "given the rapid growth, sheer size and wide scope of our business ties, it is hardly avoidable that some problems have occurred."
As for the most visible of those problems -- China's growing trade surplus, which soared to $202 billion last year -- Hu explained it as mostly the result of "different industrial restructuring of our two countries and the accelerated international division of labor driven by economic globalization." He noted that at least 90 percent of U.S. imports from China are goods that are no longer made in the United States.
China has "worked hard," he said, to cut the surplus by importing $6.7 billion in farm products from the United States last year and by committing to buy 210 Boeing Co. aircraft in the past two years.
Shortly before his speech -- in a visit that seemed a symbolic response to critics of China's trade surplus -- Hu toured a Boeing plant north of Seattle, where he told workers that they have built two-thirds of China's commercial airline fleet. He said China will need 2,000 more planes by 2020.
Many economists, the Bush administration and members of Congress from both parties blame much of the trade imbalance on what they say is China's refusal to let its currency rise to its real-world value.
Hu acknowledged no such refusal, saying that "China has taken a highly responsible attitude in deciding upon an exchange rate regime suitable to its national conditions." Having readjusted the exchange rate last year -- which raised its value by 3 percent against the U.S. dollar -- Hu said his government will now support its currency in a way that is "basically stable at an adaptive and equilibrium level."
As for the American concern about China's growing appetite for fossil fuel, Hu said that the Chinese are committed to alternative sources of energy, to conservation and to the "proper use of overseas energy." In his speech, he did not mention his country's long-term oil purchase agreements with Iran.
Hu noted, though, that China's per-capita consumption of energy is one-eighth that of the United States.