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Bush to address trade gap with China at APEC meet

US President George W. Bush urged China's consumers yesterday to buy more to reduce a yawning trade gap with the US, as he looked forward to talks with Chinese counterpart Hu Jintao (胡錦濤).

While trade could top the two leaders' agenda today they are expected to touch on a broad range of issues, such as reported Chinese cyber-attacks on the Pentagon, reflecting what Bush called a "complex" relationship.

"We certainly hope that China changes from a saving society to a consuming society," Bush told reporters ahead of the APEC summit in Sydney.

"We want the [Chinese] middle class to feel comfortable coming into the marketplace, the global marketplace, so that our producers can see the benefits directly with trade with China," he said.

China's enormous trade surplus with the US is a regular bone of contention in bilateral relations. The gap with China, which has the lion's share of imports into the US, expanded to a record US$21.16 billion in June from US$20.02 billion in May, US official data shows.

Bush said it would help to balance trade if China floated its currency, which has been allowed to appreciate in the past two years but remains tightly managed.

"We still have got a huge trade deficit with China, which then causes us to want to work with them to let their currency float. I think that would be helpful in terms of adjusting trade balances," he said.

Economists have argued that a more expensive Chinese currency would not do much to shrink the overall US deficit as US importers would just move to other low-cost suppliers elsewhere.

They have argued that core issues include the unwillingness of the Chinese people to spend more on consumer goods, and conversely, an unwillingness on the part of many Americans to save.

"I will sit down with [Hu] and have a good honest, candid discussion, and he's going to tell me what's on his mind and I'm darned sure going to tell him what's on my mind," Bush said.

He suggested that he would address concerns the Chinese military might have penetrated the Pentagon's computer systems.

"In terms of whether or not I will bring this up to countries ... from which there may have been an attack, I may," Bush said.

"Whether it be this issue, or issues like intellectual property rights, I mean, if you have a relationship with a country, then you've got to respect the country's systems and knowledge base. And that's what we expect from people with whom we trade," he said.

The Pentagon said on Tuesday that several nations and groups were trying to break into its system after London's Financial Times reported China's military had hacked into the network in June.

Meanwhile, Japan pressed China yesterday for a "full explanation" on measures to improve the safety of its products following a spate of recalls. Japanese Minister for Economy, Trade and Industry Akira Amari told Chinese Commerce Minister Bo Xilai (薄熙來) in Sydney that "If one problem comes out on the issue of product safety, the entire trust is damaged," a Japanese trade ministry official said.
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