The US and China sought to ease growing trade tensions during two days of high-level talks. Breakthroughs were expected in the areas of boosting sales of US energy technology and banking services in China.
US Treasury Secretary Henry Paulson said yesterday that the issue of food safety, highlighted by the deaths of pets after eating pet food contaminated with a Chinese-made ingredient, would also be addressed during the second round of talks that feature a large number of Cabinet officials from both nations.
Opening the discussions in an ornate government auditorium decked out with flags from both nations, Paulson called the event historic because of the number of Cabinet officials from both sides who were participating.
"Never before have so many ministers from China gathered in one place in the United States. ... We both realize how critical it is for our countries that we get our long-term economic relationship right," Paulson said.
He said it was important for the two countries to work toward "near-term agreements that build confidence on both sides."
A senior Chinese official, meanwhile, said the US and China should cooperate to bring their trade relationship into balance and not complicate the situation by taking a confrontational approach.
"Problems and contradictions emerging in the development of China-US trade and economic relations should be taken calmly and handled properly," Chinese Vice Premier Wu Yi (
China is expected to announce that it is cutting tariffs on the imports of energy services and technologies, which would boost the market for US products. Beijing is also expected to increase the stake US and other foreign companies can own in Chinese banks. That ownership level is currently capped at 25 percent.
The administration also hopes to reach a deal expanding opportunities for US airlines in China.
Among the officials participating in the talks are US Health and Human Services Secretary Michael Leavitt and Agriculture Secretary Mike Johanns, whose agencies are dealing with issues of food safety from Chinese imports.
Paulson was leading a US delegation that includes top officials from 11 Cabinet-level agencies and Federal Reserve Chairman Ben Bernanke. Wu's team includes 14 Cabinet-level ministers.
A similar collection of high-powered talent assembled for the first session of the strategic dialogue held last December in Beijing. Under an agreement announced last fall, the two countries plan to meet twice a year to discuss a wide range of economic issues.
The two sides were scheduled to dine at the US State Department last night, and the Chinese delegation was scheduled to meet with US President George W. Bush during the visit and to have closed-door talks with key members of Congress.
Unhappiness about the US' growing trade deficit with China is threatening to provoke a protectionist backlash in Congress. Lawmakers are expressing outrage over a trade gap that hit US$232.5 billion last year, the largest deficit ever recorded with a single country and one-third of the US' record overall deficit of US$765.3 billion.
Members of Congress are promoting a number of bills that would slam penalty tariffs on Chinese products unless China does more to halt what US critics see as unfair trade practices such as China's currency system and the rampant piracy of US products.
US manufacturers contend that China is manipulating its currency to keep it undervalued against the dollar by as much as 40 percent, making Chinese goods cheaper in the US market and US products more expensive in China.
A group of 42 members of the House of Representatives from both the main US political parties last week petitioned the Bush administration to bring a trade case against China on the currency issue. Lawmakers said they were not impressed by China's announcement on Friday that it was slightly widening the daily trading range for the yuan, a move that could allow the currency to rise in value more quickly.
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