Bush to tread delicately on China U.S. seeks firm footing on trade, Taiwan issues
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By Gregory Robb, CBS Marketwatch.com
Last Update: 4:00 PM ET Dec. 7, 2003
WASHINGTON (CBS.MW) -- When President Bush welcomes Chinese Premier Wen Jiabao to the White House on Tuesday, he will proceed with as much caution as when crossing a frozen pond -- taking one step at a time and poking ahead for thin ice.
Bush is eager to continue the improvement in ties with China that emerged after the Sept. 11 terrorist attacks and resulted in close cooperation over North Korea's nuclear program.
At the same time, the White House will try to avoid the many political and strategic traps that could sour the relationship, analysts said.
"I think that will be a message that comes out of Washington -- that we do have common interests," said Princeton University Prof. Thomas Christensen. "We have common interests in the international economy, we have common interests in the war on terror and we have common interests on North Korea."
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The top agenda items will be trade, Taiwan and North Korea, Christensen said.
The visit comes at a critical time because China has finally emerged as a crucial global economic player. "The U.S. wants a very solid and smooth meeting that makes sure the relationship continues on a positive trajectory," said Nao Matsukata, a former official in the U.S. Trade Representative's office and now with the law firm of Hunton & Williams.
The U.S. and China are now at the "critical moment" beginning to define a long-term relationship, Matsukata said. Decisions made at this summit "will ultimately start being the permanent direction of how this relationship goes."
Opening Chinese markets
The top trade priority for the White House and U.S. business is to encourage China to detail its plans for opening key markets, as is required under the deal that allows it to enter the World Trade Organization.
Even some of China's top supporters in Washington believe China hasn't done enough to meet its WTO obligations.
China "has not made as much progress as many of us believe they could and should have," said Robert Kapp, president of the U.S.-China Business Council, a trade group for U.S. multinationals with significant operations in China.
Several U.S. industries will watch this week's meetings closely:
Insurance: The U.S. insurance industry is growing impatient for China to open up its domestic insurance market, said Brad Smith, the American Council of Life Insurers' managing director for international relations.
China has delayed releasing regulations that will govern the expansion of foreign insurance companies in China.
"In September, there was cautious optimism. Now there is more concern," Smith said.
During the Wen visit, the Bush administration is expected to call for a meeting to review China's insurance market regulations.
"We're ready to go to China at any time" to spell out how China will meet its WTO commitments, Smith said.
Agriculture: The largest single issue for the U.S. agriculture sector is China's blocking of plant and animal imports, according to an industry lobbyist who spoke on the condition that he not be identified.
Manufacturing: The manufacturing sector, which has been the most critical in recent months of China's trade practices, wants the Bush administration to set deadlines for China reforms but doesn't expect that to be on the agenda.
"There will be some very general and fairly superficial discussions with an agreement to have further, more detailed talks at lower levels in the near future or early next year," said Auggie Tantillo, Washington coordinator for the American Manufacturing Trade Coalition.
Chipmakers: The semiconductor industry expects the White House to raise two issues with the Chinese: the discriminatory use of value-added taxes and intellectual property concerns, said Anne Craig, the director of international trade for the Semiconductor Industry Association.
Trade limits and currency
Despite the concern over WTO compliance, U.S. analysts said the talk of rising trade tensions between the two countries is overblown.
Economists view the recent 7.5 percent growth limit placed on three categories of Chinese textiles by the U.S. government as a relatively limited action.
The Bush administration has opposed any effort by Congress to impose more tariffs on Chinese goods.
And although the White House has been pressing China to float its currency, the administration has declined to accuse China of manipulating its currency, as many members of Congress have.
The Bush administration has "not been aggressive about complying with the people who say China is trading unfairly -- with the idea of having the larger relationship remain stable," Matsukata said.
Some analysts compare current U.S.-China relations to the many trade disputes between the U.S. and Japan in the 1980s.
But Matsukata said there is a fundamental difference. The U.S. and Japan always had a security treaty that was never threatened by trade dispute.
"China is a competitor, a potential enemy, and a potential ally. That bring instability into the situation," he said.
"The strongest point of this administration's China policy is that it recognizes that a stable China is in the best interest of the United States, that the smaller issues that people are raising that could potentially disrupt the relationship for parochial interest are nowhere near as important has having a stable China," he said.
Split over Taiwan, united over North Korea
Differences over Taiwan will be a source of continued disagreement at the summit, analysts said.
The Bush administration is likely to rebuff efforts by China for a commitment from the U.S. to oppose the recent actions of Taiwan President Chen Shui-bian, said Christensen.
"I think many people in Washington believe that the United States
has already expressed its lack of support for those activities and should not do more to interfere in Taiwan's politics. My guess would be on that one score the Chinese government is unlikely to come away fully satisfied," he said.
On North Korea, analysts expect the Bush administration to thank China for its cooperation.
"I think the Wen Jiabao visit will be an opportunity to express gratitude to China for its cooperation to date in helping establish the multilateral approach toward North Korea but also to try to look forward and say 'what are we going to do next,'" Christensen said.
"There may be some differences about how to proceed from here -- in terms of timing, phasing of offers, in terms of what punishments should be raised if North Korea doesn't comply with its own
commitments. It is still an open question whether or not the North Korea talks will result in agreements which everyone can accept," he said.
Greg Robb is a senior reporter for CBS MarketWatch |
