China-U.S. Trade Talks Come to a Close
ROBERT SIEGEL, host:
From NPR News this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris.
China is taking some modest steps to further open its economy to the U.S. They were announced today at the end of two days of high-level talks in Washington. As NPR's Frank Langfitt reports, the gestures probably won't impress critics on Capitol Hill, where lawmakers are considering slapping China with trade sanctions.
FRANK LANGFITT: You know talks haven't produced many tangible gains when someone says something like this.
Mr. HENRY PAULSON (U.S. Treasury Secretary): What we've announced have been incremental changes.
LANGFITT: That's Treasury Secretary Henry Paulson at a press conference this morning. He stated some progress: American businesses will have a little more access to China's financial services sector, and U.S. airlines will be able to double daily flights between the countries within five years. But on the big issue - getting China to let its currency raise more - Paulson came up empty.
Mr. PAULSON: They agree with us on principle, the pace of change is picked up, but I believe it would be very much in their best interest and in the rest of the world's best interest for them to move more quickly.
LANGFITT: China's critics say it has held its currency artificially low to keep exports cheap. And many in Congress complained that that has caused American's jobs and contributed to the countries ballooning trade deficit. Last year, the U.S. trade gap with China set a record, $232 billion. The Chinese are on Capitol Hill this afternoon to talk with congressional leaders. Paulson suggested they can expect an earful.
Mr. PAULSON: We've explained to them that the American people have concerns about trade, globalization, don't believe the benefits of trade are being shared evenly or equally with our trading partners particularly China.
LANGFITT: But Vice Premier Wu Yi, who leads the Chinese delegation, warned Congress not to try to punish her country.
Ms. WU YI (Vice Premier, China): (Through Translator) To properly manage such a relationship and constantly move forward China-U.S. economic and trade cooperation, it call for direct consultation and dialogue between us instead of easy result to threat or sanctions.
LANGFITT: One reason the Chinese don't want to increase the value of their currency faster is because it will raise the price of their exports and hurt Chinese companies. Gary Hufbauer follows trade at the Peterson Institute for International Economics - a Washington think tank. He says a major reevaluation of China's currency, the renminbi or yuan, could wipe out hundreds of thousands of jobs in the country's textile sector alone.
Mr. GARY HUFBAUER (Senior Fellow, Peterson Institute for International Economics): Some of the firms are operating on very thin margins, so their whole calculation is that if the RNB goes up by 10 percent, that wipes out their profit margin. And not only wipes out their profit margin but makes the whole investment that they put in seemed worthless, so they're scared.
LANGFITT: After talks with House Democrats today, the Chinese will move to a more sympathetic venue tomorrow, the White House. President Bush is an avowed free trader.
Frank Langfitt, NPR News, Washington.
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