Sino-American Relations Are in a Pronounced Dip

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A high-level delegation from China is in Washington for two days of talks on trade and economic issues. The discussions are expected to cover everything from environmental matters to financial services to China's cheap currency. While cooperation and mutual benefit will be the watchwords, things will be tense.

ROBERT SIEGEL, host:

A high-level delegation from China is in Washington for two days of talks on trade and economic issues. The discussions are expected to cover everything from environmental matters to financial services to China's cheap currency. And while there will likely be speeches about cooperation and mutual benefit, NPR's senior news analyst, Daniel Schorr, expects things to be tense.

DANIEL SCHORR: About half of the Chinese Cabinet is steaming into Washington for the second of the semi-annual meetings organized by Treasury Secretary Henry Paulson. The idea is to foster economic cooperation, but you might not know it.

The Economist magazine headlines on its cover: America's Fear of China. As a possible expression of that fear, large quantities of tainted medications and food supplements imported from China have been seized by the Food & Drug Administration.

The American delegation is taking a tough position on trade violations under pressure from American labor, dismayed at the loss of jobs. Trade bills are pending in Congress. Last month, the United States sued China in the World Trade Organization over alleged violation of intellectual property rights on items like pirated DVDs. China's cheap currency, which fosters exports, remains an issue between China and the United States. The U.S. has a huge trade deficit with China, and China is entering American capital markets.

The government has announced that it will acquire a $3 billion stake in the Blackstone group, an effort to diversify foreign exchange reserves. But the big issue remains trade and American determination - especially in a pre-election year - to try to save jobs. A group of House members is demanding an upward valuation of the yuan, China's currency.

The economic tension comes at a time when China has displayed a cooperative spirit on the political front on issues like North Korea, Iran, and even Taiwan. The Council on Foreign Relations has just released a task force report on relations with China urging emphasis on integrating China into the world community. A separate report may be needed on overcoming economic competition.

This is Daniel Schorr.

SIEGEL: This is NPR, National Public Radio.

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