China, U.S. Come to Trade Talks At Odds

This week, 42 members of the House filed a petition calling for the U.S. trade representative to take "strong action" to end China's currency controls, threatening that if the Bush administration doesn't resolve the situation, Congress will.

"We have watched China manipulate its currency at the expense of American workers, farmers and businesses for too long," House Ways and Means Chairman Charles B. Rangel (D-N.Y.) said in a letter accompanying the petition.

The United States in February filed a World Trade Organization case charging China with providing illegal incentives to Chinese manufacturers of such items as steel. In March, the United States slapped tariffs of up to 20 percent on high-gloss paper made in China, complaining of subsidies. In April, the United States sued China in the WTO over intellectual property protection.

While these actions may make sense in the United States, where much of the public sees Washington as doing too little to protect American interests, they have played poorly in China. Economists here describe themselves as startled by the degree to which the United States is willing to take action to protect its companies and domestic industries while criticizing China for doing the same. In short, they perceive hypocrisy.

In the Chinese trade narrative, a case in point is China National Offshore Oil's attempt in 2005 to take over Unocal, a U.S. oil company. The state-owned oil giant withdrew its $18.5 billion offer after Congress threatened to block the deal. The episode came after the Chinese had spent years listening to U.S. lectures about how modern economies must be open to foreign investment and had opened their own economy to a flood of U.S. capital.

"There are lots of disturbances in U.S.-Sino relations," said Zhao Yumin, director of the Chinese Academy of International Trade and Economic Cooperation, a research group affiliated with the Commerce Ministry. "From China's point of view, it just wants stable development. But American enterprises have an anti-Chinese feeling."

In recent months, official rhetoric on U.S.-China trade has grown increasingly hostile.

When the United States imposed the tariffs on paper, China said the sanctions violated a pledge to resolve trade disputes through dialogue. On the intellectual property issue, Wu response, roughly translated, was "If you want a fight, let's fight."

In next week's talks, the Chinese side is expected to seek fewer restrictions on high-technology exports and a recognition that China has become a market economy. The technology issue in particular is sticky. China says it would buy more expensive U.S. technology goods if it were allowed to do so; the U.S. government imposes controls on many high-tech exports that it fears could be converted to military use.

Beyond deals on such issues, Chinese leaders will be looking for something more basic: a better understanding of Congress and the role it plays in setting trade policy. To China's political and economic leaders, accustomed to operating in a government controlled by the Communist Party, the many-headed American government -- with its multiple, often-conflicting voices -- is a mystifying creature.

A senior Finance Ministry official said the Chinese side is puzzled by the way members of Congress focus on a small local issue, such as a factory closure in their district, even at the expense of the larger relationship between the countries. "Sometimes it is a question of only 200 jobs lost," he said.

The official, who requested anonymity in order to speak candidly, acknowledged that China's senior civil servants such as himself have trouble understanding such concerns, even though they have been told about the U.S. system with its checks and balances and competing powers. He said senators think they are the president and House members see themselves as "at least a vice president."

"This is something we can hardly understand," he added, "and that is why we need to have the strategic dialogue."

Correspondent Edward Cody in Beijing and researcher Crissie Ding in Shanghai contributed to this report.