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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (1714)	12/5/2003 7:48:08 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China's Wen in mission to ease trade friction By James Kynge in Beijing Published: December 5 2003 20:15 \| Last Updated: December 5 2003 20:15 The US is accusing China of unfair trade. But to Yang Rong, an entrepreneur making Snoopy-branded bras for export to America, such charges are a cruel irony. The injustice, he says, all flows from the American side. It was US buyers who drove down the prices of the bras made by his and other Chinese factories, thereby triggering the surge in imports that was recently used to justify proposed US "safeguard" tariffs on some categories of textiles. "They blame us for selling things too cheap and now they threaten us," says Mr Yang, manager of Jinhua Asset Underwear Company in the central province of Zhejiang. "But they caused this. We wanted to sell more expensive bras but they beat down the price." When Wen Jiabao, China's prime minister, flies to the US on Sunday his main mission will be to protect the future interests of people like Mr Yang. The battle over bras, dressing gowns and knitted items already seems lost; Washington is likely to impose its planned tariffs, trade experts say. But there is a great deal more to play for. China is convinced that it needs to maintain a warm relationship with the US in order to forestall protectionist offensives against other items which make up a Chinese trade surplus with America that is expected to reach about $125bn (?104bn, £73bn) this year. "The US textile industry is pushing for quotas across the board on Chinese textiles in the future," says Nicholas Lardy, a China expert at the Institute for International Economics in Washington. "The question [over Mr Wen's trip] is what the Chinese are prepared to give to ensure there aren't quotas across the board." It is this question that makes the visit of Mr Wen, his first since taking office in March, a challenge. China, which has already caught part of the blame for the loss of 2.6m American jobs since President George W. Bush took office, is keen to avoid becoming a political punchbag in the campaign for the 2004 presidential election. For weeks, Chinese officials have been preparing arguments with which Mr Wen can reduce trade tensions. First there was Beijing's recent shopping spree for Boeing aircraft, General Electric engines and farm goods. Then there were gestures on market access: entry barriers for banks were lowered, Citibank was promised a licence for a mainland credit card and General Motors was told it would be allowed to offer car finance. Mr Wen is also expected to make much of the fact that China is America's fastest-growing export market, with US companies selling around $20bn to China this year, up about 20 per cent on last year. In addition, he may explain that China's trade surplus with the rest of the world is shrinking and could even turn negative next year. Although trade friction is unlikely to abate for months, there is a fair chance that Mr Wen's arguments may make some headway and that his visit will be judged a success, foreign diplomats and analysts believe. "Aside from the trade friction, the stars are aligned pretty positively on other issues," Mr Lardy says. "The US has to recognise China's importance in the region, its diplomacy in south-east Asia and its big contribution to [global] trade growth." As ever, the issue of Taiwan has attracted controversy in the run-up to Mr Wen's trip, with China criticising Washington's ties to Taipei's military and accusing it of emboldening Chen Shui-bian, Taiwan's president, to push closer to independence from the mainland. However, Beijing's ire was softened after James Moriarty, a Bush administration envoy, travelled to Taipei to warn Mr Chen to refrain from unduly provoking China, diplomats say. In any case, Washington needs Beijing's diplomacy if it is to find a negotiated solution to another foreign policy headache: North Korea's pursuit of nuclear weapons. Overall then, Mr Wen's visit may provide enough mood music to boost the Chinese premier's stature at home. It may also do a little to damp US ire on trade. But for Mr Yang's bra business, it has come too late. "We had tripled our capacity and were going to recruit 600 new workers next year," he says. "But now we are finding that orders are already being cancelled from America and now we wonder if the European business will start to fall off." Unless things get better, Mr Yang warns he may have to lay off workers. That is a spectre US textile companies have been familiar with for some time. news.ft.com