Trade Issues Add Spice to U.S.-China Relations

China's surging textile exports and its reluctance to devalue the yuan are two of the sharpest thorns in U.S.-Chinese relations. Will there be relief any time soon?

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Textiles were the main topic of conversation this weekend at meetings in Beijing. China's Commerce minister played host to an American delegation that included the secretary of Commerce and the US Trade Representative. Washington is upset about a recent surge in Chinese textile exports. NPR's Rob Gifford reports that other issues came up as well; among them, China's currency and recent remarks by Defense Secretary Donald Rumsfeld.

ROB GIFFORD reporting:

US pressure for currency reform and export curbs have been the main problems in the US-China relationship. Donald Rumsfeld added to that friction on Saturday with sharp criticism of China's increase in military spending and its lack of democracy. In a rare 40-minute interview in Beijing today, Commerce Minister Bo Xilai resolutely defended the increase in China's textile exports.

Mr. BO XILAI (Commerce Minister, China): (Through Translator) This increase is completely natural because the quota was scrapped. For a long time the quota suppressed the production capabilities of export countries. Under WTO rules, we are allowed to get rid of these quotas. At the same time we also opened our markets to US agricultural and service products. It's an exchange.

GIFFORD: If the US or EU can show that the increase in exports causes disruption in their markets, they're entitled to impose a limit of 7.5 percent annual growth on textile imports from China. The US and the EU have already imposed temporary quotas on several types of Chinese textiles. Bo Xilai said you cannot take the short-term surge in exports in the first few months of this year and extrapolate trade figures for the whole year from them.

Bo was positive about the visit of US Commerce Secretary Carlos Gutierrez and Trade Representative Rob Portman at the weekend. `If the result of current negotiations is good,' he said, `then the two sides can overcome their difficulties. If not, China may have to adjust its policies,' he added, hinting that Beijing might rethink opening up its agriculture and service markets. Minister Bo, at various points during the interview, addressed the American people and laid out the benefits of China's low-price exports.

Mr. BO: (Through Translator) There are lots of low-priced Chinese goods in US supermarkets. These low-priced products help American consumers save a lot of money. As a result of buying cheaper, Chinese-made goods, consumers are saving hundreds of millions of dollars. This is hugely beneficial to ordinary Americans.

GIFFORD: Bo Xilai accused the US government of exaggerating the problem and linking it with political issues. But he also wielded a large carrot as well as a large stick, emphasizing the size of the Chinese market for US goods. He said, `There are 30 million Chinese people entering the middle class every year.' Bo also turned the sensitive issue of US jobs on its head, saying that while he understood some of the US government's domestic problems, 20 million people in China depend on the textile trade for employment. `So, of course,' he said, `this is an issue that Beijing must consider.' Throughout the interview Bo Xilai made clear Beijing's frustration.

Mr. BO: (Through Translator) With our foreign reserves, we buy a lot of US government bonds, which do not give us very high interest. Our money has helped the US keep inflation down and helped you solve some deficit problems. But despite our helping you, you still complain about what we do and about the trade deficit.

GIFFORD: Despite the criticism, Bo went out of his way to emphasize how important the China-US relationship is for the coming decades. And he finished with an appeal for understanding. `A hundred million Chinese people live on less than a hundred dollars a year,' he said. `After dominating the world economy for 200 years,' he asked, `why do Western countries begrudge China trying to raise the standard of living of these people just a little through its textile exports? That,' he said, `is really double standards.' Rob Gifford, NPR News, Beijing.

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