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US taking a tougher stance against China

The Bush administration is becoming more assertive with China on issues ranging from trade and currency to nuclear proliferation as concerns over Iraq and terrorism begin to ease.

The change in approach comes amid mounting pressure from Congress, concerned about a swelling trade deficit with China on the back of an undervalued yuan currency, and Beijing's seeming reluctance to use its enormous clout to reign in North Korea's nuclear weapons drive.

"I see new energy and interest in addressing what the United States perceives to be its top priority in the US-China relationship -- namely rectifying trade imbalance and dealing with North Korea's nuclear proliferation," said Elizabeth Economy, an expert on US-China relations at the US Council on Foreign Relations.

The shift reflects a "return to the more traditional kind of US-China relationship rather than something very new and startling," and part of it has to do with less attention focused now on the war on terror and Iraq, she said.

Bush abandoned his aggressive China policy after the Sept. 11, 2001 terror attacks on the US.

He downplayed key bilateral differences as a tradeoff for Chinese support for Washington's war on terror and tacit backing for the US-led war on Iraq.

Nearly four years later, as Bush trumpets gains in Iraq and the war on terrorism and faces an increasingly impatient Congress over his China policy, the administration is slowly turning the screws on Beijing.

Over the last two weeks, for example, the Bush administration has stepped up pressure on China to introduce a flexible currency.

"Action is needed now. This is a coordinated effort to get the message across," a senior administration official told the Financial Times, calling on China to move immediately to revamp its policy of linking its yuan at a fixed rate to the US dollar.

The newspaper called it "a marked shift in tactics after several years of patient diplomacy" aimed at nudging China towards allowing the yuan to float.

The decision to demand prompt action by Beijing comes in the face of growing pressure from the US Congress over the whopping US trade deficit with China of US$162 billion last year.

In a surprise move, senators voted 67-33 this month to allow consideration of a bill championed by Democratic Senator Charles Schumer that will impose a 27.5 percent tariff on all Chinese imports if Beijing does not revalue in six months.

"Teddy Roosevelt once advised that the best negotiating strategy was to, `speak softly and carry a big stick,'" Schumer said.

The Bush administration's quiet encouragement to help China's leadership "see the light" has proven to be a "great failure" and "it is time to bring out the big stick and enforce US trade laws," he said.

Pressure is building up on China on the trade front too.

Rob Portman, Bush's US Trade Representative nominee, took a tough stance against China in his confirmation hearing last week, pledging a "top-to-bottom review" of trade disputes between Washington and Beijing and to use "the entire range of enforcement tools" at his disposal.

Portman said the trade deficit with China showed "the Chinese don't always play by the rules."

He said he would focus on stopping Chinese pirating of US intellectual property, rolling back China's industrial policies that exclude US products, expanding market access for US goods, and ensuring China implements its commitment to allow transparency and distribution rights for US products.

Washington is also signalling to China that despite its 20 months of chairing a six-party negotiating process to end North Korea's nuclear weapons program, there seems to be little or no progress.
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