U.S. Delegation in China for Economic Talks

With Christmas and an election year closing in, Congress and business groups are in a pitched lobbying battle over the issue of product safety and U.S. trade with China. Treasury Secretary Henry Paulson and other U.S. Cabinet secretaries are in Beijing for high-level economic talks with China.

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Between Christmas shopping and an election year, business groups have stepped up their lobbying efforts in Congress over the issues of product safety and U.S. trade with China. It's at this sensitive time that Treasury Secretary Henry Paulson has led a group of U.S. Cabinet secretaries to Beijing for a high-level economic talks with China.

NPR's Anthony Kuhn is there with the story.

ANTHONY KUHN: Secretary Paulson's message at the start of the talks was that China and the U.S. are more economically dependent on each other than ever before.

Secretary HENRY PAULSON (U.S. Department of Treasury): There is hardly an issue - from trade to product safety to climate change - where American and Chinese economic interests do not overlap.

KUHN: But at the same time, Paulson noted, the trade relationship has become the focal point of both nation's economic anxieties.

Sec. PAULSON: Worries about the effects of foreign competition through trade or through a foreign investment have led to a rise in economic nationalism and protectionist sentiments in both of our nations.

KUHN: Sitting directly across from Paulson was his counterpart, Vice Premier Wu Yi, China's top economic official. She noted approvingly that Paulson and other Cabinet officials, as well as the heads of major U.S. corporations, had written to Congress in recent months opposing pending legislation that would hit China with punitive trade sanctions.

Ms. WU YI (Vice Premier, China): (Chinese spoken)

KUHN: I must frankly tell Secretary Paulson and our American colleagues, she said, that if these bills are passed, they would seriously harm trade and economic relations between the U.S.and China.

This is the third round of the U.S.-China strategic economic dialogue, and the pressure to come up with results has never been greater. The two sides signed nearly a dozen agreements ahead of today's talks including memorandums on the safety of food and drug imports. These require that Chinese quality control officials certify the safety of some food and drug exports to the U.S. according to U.S. standards.

On Monday, Health and Human Services Secretary Mike Leavitt explained what the deal means for Chinese companies.

Secretary MIKE LEAVITT (U.S. Department of Health and Human Services): If you want to have access to American consumers, you need to produce products that meet American standards of safety and quality. We want you to have access to our markets; we would like to have access to yours. We expect that when you produce, you'll meet standards, and we want to tell you what our standards are and how to meet them.

KUHN: Also Monday, the Chinese-American group, the Committee of 100, released a poll showing that two-thirds of Americans had lost confidence in Chinese-made products following a spate of recalls of pet food, toys and other items. China argues that the overwhelming majority of its exports is safe, and that U.S. media have intentionally exaggerated the problem.

At a background briefing last Friday, Chinese officials briefed foreign reporters on the condition that they not be named. One product safety official said that the toy recalls were not just China's fault.

Unidentified Woman (Product Safety Official: (Through translator) Of the more than 30 million Chinese-made toys recalled in the U.S. this year, 85 percent were due to defective designs. Designers, importers and manufacturers should bear joint responsibility and take measures together to protect consumer safety.

KUHN: Another source of friction is China's huge trade surplus with the U.S. which Washington says is on track to exceed last year's record of $233 billion. Some U.S. legislators and trade groups say that China intentionally undervalues its currency, giving its exports an unfair advantage. But both sides at today's talks said the way to deal with this imbalance is to increase U.S. exports to China and not cut Chinese exports to the U.S.

Ms. YI: (Chinese spoken)

KUHN: China has no intention of seeking large trade surplus with the U.S., said Vice Premier Wu Yi. Our policy is to maintain a basic balance of international payments. Again, I urge the U.S. to relax export controls on high-tech products for civilian use.

The two sides signed an agreement this week which would reduce barriers to high-tech trade and another aimed at increasing U.S. exports to China's large but often overlooked second tier cities. But these agreements, analysts say, are unlikely to silence voices in both countries, urging protection for domestic industries.

Anthony Kuhn, NPR News, Beijing.

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