Thread: Sino-US Relations, General Discussion.

From US Treasure press release.


http://www.treas.gov/press/releases/hp1318.htm
December 5, 2008
HP-1318

United States and China Announce $20 Billion in Finance Facilities
that Will Create up to $38 Billion in Annual Trade Finance
to Assist Global Trade

Beijing – Consistent with the direction of G-20 Leaders to improve trade finance for emerging markets, Secretary Henry M. Paulson, Jr. and Chinese Vice Premier Wang Qishan today announced a new partnership for increasing trade related finance to emerging markets. Together, the United States and China expect that their efforts will generate total trade financing for up to $38 billion in exports over the next year.

Trade finance is credit to allow exporters and importers to ship their goods and services. Companies involved with trade finance include importers, exporters, financiers, insurers and other service providers. Everyday trade in raw materials, intermediate goods and consumer goods is dependent upon the availability of trade financing. Shortages of trade finance can immediately retard economic output and employment through reductions in trade flows, and can restrict financing for capital goods necessary for world economic growth.

Current financial stresses have impaired access to trade finance to help emerging market businesses and consumers purchase imports. To support exports of products from the U.S. and China to emerging economies, both countries are making additional resources available to increase access to affordable trade finance

Secretary Paulson stated: "These new sources of financing will send an important signal to emerging markets that we are committed to sustaining trade flows, the lifeblood of the global economy. China's decision to play a central role in supporting trade finance reflects its stature in the global financial system and its commitment to help reinforce growth in economies around the world. I also appreciate the leadership of Bob Zoellick at the World Bank and Luis Alberto Moreno at the Inter-American Development Bank for increasing the amount of trade finance that their respective institutions are prepared to back. As the largest shareholder of both institutions, we are supportive of their efforts."

Specifically, the United States, through the U.S. Export-Import Bank, announced its intention to provide $4 billion in new short-term trade finance facilities and $8 billion in new medium- and long-term trade finance facilities for export of U.S. goods and services to emerging markets. China, through the Export-Import Bank of China, is providing $8 billion in short-, medium-, and long-term trade finance facilities for export of Chinese goods and services to emerging markets. Short term trade financing, typically 90 to 180 days in maturity, effectively supports three or more times the value of financing in trade volume during a year. Both countries will also coordinate with the International Finance Corporation and the Regional Development Banks to complement existing emerging market liquidity efforts.

The program will be implemented through bilateral export credit agencies in the form of direct loans, guarantees or insurance to creditworthy banks. Both the U.S. Export-Import Bank and the Export-Import Bank of China will identify transactions for financing according to their respective views of the importance of the transaction and its need for financing.

http://www.bloomberg.com/apps/news?p...d=aRj1K6.PYtqM



U.S. Arms Sales to Taiwan May Slow ‘New Era’ of Ties With China



By Dune Lawrence



Jan. 14 (Bloomberg) -- U.S. arms sales to Taiwan may strain ties with China even as the two countries cooperate more closely, current and former Chinese officials told their American counterparts in Beijing at a conference that ended yesterday.



Taiwan is the most important issue in relations between the U.S. and China , as they confront a global economic crisis that has highlighted their interdependence, the officials told former American diplomats Henry Kissinger and Zbigniew Brzezinski during the two-day celebration of 30 years of formal relations.



“Recently, some hard-won advances have been made in cross- strait relations,” said Li Zhaoxing, who was China ’s foreign minister from 2003 to 2007. “We certainly don’t want something like arms sales to disrupt” the progress.



China, with the world’s largest regular army, has more than 900 missiles along its southeastern coast aimed at Taiwan . The Taiwanese military is planning to buy $6.5 billion of U.S. weapons including Lockheed Martin Corp.’s Patriot anti-missile systems. China has frozen military exchanges with the U.S. since October over the arms sales.



“The Taiwan issue is the most important and sensitive one in relations between the two countries,” Dai Bingguo , China ’s highest ranking official responsible for foreign relations, told the conference participants.



Relations between China and Taiwan warmed after President Ma Ying-jeou took office last year and reversed course on his predecessor’s pro independence stance. The mainland claims Taiwan as its territory, though they have been ruled separately since Chiang Kai-shek’s Nationalist army retreated to the island in 1949 after being defeated by Mao Zedong’s Communist forces.



Closer Ties



The two sides ended a six decade-ban on direct shipping, air and postal links last month, and Chinese President Hu Jintao, in a speech on Dec. 31, emphasized economic cooperation, proposed military exchanges to build mutual trust and repeated previous offers to sign a formal armistice with the island.



“I do not think Taiwan should be a fundamental obstacle to our relationship,” Kissinger said yesterday on the sidelines of the conference. Kissinger served as secretary of state from 1973 to 1977 under presidents Richard Nixon and Gerald Ford and played a key role in Nixon’s 1972 visit to China .



Brzezinski, 80, veteran diplomat who was national security adviser under President Jimmy Carter and advised President-elect Barack Obama during his campaign, also downplayed the importance of Taiwan in U.S.-China ties.



“The better the American-Chinese relationship, the less salient is the Taiwan issue and the easier it is for Taiwan and the mainland to establish an increasingly organic relationship,” he told reporters yesterday.



‘Higher Level’ Relations



Both he and Kissinger urged a new focus on relations with China , with Brzezinski calling for a “comprehensive global partnership” and Kissinger saying that relations must reach a “higher level.”



Still, Kissinger acknowledged “there is likely to be some disagreement” over arms sales to Taiwan .



Brzezinksi and former National Security Adviser Brent Scowcroft put the onus on China to take steps to decrease military tensions related to Taiwan .



“If the Chinese, for example, would pull back or eliminate some of the missiles directed at Taiwan , it would make it possible for the American president to say, ‘ Taiwan does not need additional arms,’” said Scowcroft, who served under presidents Ford and George H. W. Bush. “That would be a very stabilizing direction in which the two sides could go.”



To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net

30th Anniversary of the Establishment of Diplomatic Relations With China
John D. Negroponte, Deputy Secretary of State
Press Conference at U.S. Embassy
Beijing, China
January 8, 2009
http://www.state.gov/s/d/2009/113669.htm
View Video Excerpt

DEPUTY SECRETARY NEGROPONTE: Thank you.

Statement of Deputy Secretary of State John D. Negroponte at the U.S. Embassy Press AvailabilityGood morning. I appreciate your welcoming me back to Beijing. It is indeed an honor to be here on this special occasion of the 30th Anniversary of the establishment of diplomatic relations between our two countries.

I first visited China in June of 1972 on a delegation led by Dr. Henry Kissinger at a time when our two countries had lived I political, economic and diplomatic isolation from each other for more than two decades. The changes in our relationship since that time have been truly dramatic. Our two countries have interactions and exchanges across the entire spectrum of human activity on a scale and a depth that simply could not have been imagined when we first established diplomatic ties in 1979.

Today instead of living in isolation from each other we are interdependent. Our combined economic strength makes it essential that we work closely to meet the many international challenges that we face together in the 21st Century.

As President Bush’s administration ends, we believe we are leaving in place a strong record of accomplishment in United States-China bilateral ties and robust dialogue mechanisms for dealing with issues of concern to our two countries, whether in the international economic sphere or in the realm of regional and global peace and security.

Building on this record of diplomatic accomplishment going back three decades and spanning both Democratic and Republican administrations. We believe the basis exists for continued and even expanded contributions by China and the United States to global peace and prosperity in the years ahead.

That concludes my opening remarks. I’d be pleased to try and answer any questions that you might have.

QUESTION: I wanted to ask you going forward what you think will be the major challenges for the Obama administration as they come in in terms of U.S. policy towards China.

DEPUTY SECRETARY NEGROPONTE: I don’t have my crystal ball with me today so I’d be reluctant to try to make any very precise predictions, but clearly, and as my introductory remarks suggest, there are sort of two main areas of focus in the United States-China relationship. One is the issue of regional and global peace and security on the one hand; and the other is the international economic situation. So I think those are going to be the two areas of focus.

With regard to the regional peace and security, I think one of the issues that will obviously be of continuing interest will be the question of the 6-Party talks and the desire of both of our countries, China and the United States, to see progress towards denuclearization of the Korean Peninsula. So I think I would want to highlight that issue.

Then as far as the economic situation is concerned, I think both of us will want to work hard in the year ahead to uphold our mutual commitment to promoting an open international trading and financial system. I think the statement that was made at the recent G20 meeting about the commitment of the participating countries to open and free markets remains extremely important at a time of economic challenge such as the one we are living through.

QUESTION: Mr. Negroponte, if you look at the past eight years of handling relations with China, do you have any regrets about it? If you have, what is your expectation for the next government to make up these regrets?

DEPUTY SECRETARY NEGROPONTE: I don’t have any particular regrets. In fact I would venture to predict that when historians look at the record of the Bush administration that surely one of the highlights will be the progress that has been achieved in the United States-China bilateral relationship. Whether through the increased level of economic activity, which has been very significant. China is now our third most important trading partner. To issues such as cooperation between us on regional and global security issues.

I think one issue I’d particularly like to highlight is the fact that our two Presidents established very close personal relationships. They met quite frequently. Just to cite an example, they met twice in the month of November alone. They’ve had extensive telephone contact and communication. And then below the level of Presidents we have established very solid mechanisms for dialogue both in the economic and in the political areas. I think I’d particularly highlight the Strategic Economic Dialogue led on our side by Secretary of Treasury Hank Paulsen and on the Chinese side by the Vice Premier as the kind of mechanism that we would hope, as the Bush administration comes to an end, would continue in the next administration. We certainly commend to the next administration the dialogue mechanisms, bilateral dialogue mechanisms between the United States and China that we have established and commend them to the attention of the incoming administration.

QUESTION: Chinese capital has been instrumental in financing U.S. deficits. U.S. deficits are going to grow, as we all know. Will China continue to provide the capital that we need for that financing? Do you have any reason to doubt it?

DEPUTY SECRETARY NEGROPONTE: Clearly this is a question that primarily needs to be addressed to the Chinese themselves, but one of the points that I would make would say, in reply to your question, is that in the discussions that I had my Chinese interlocutors pointed out that they have been very responsible in dealing with the question of the American debt that they do hold. I think they want to be viewed as a reliable partner in that regard.

QUESTION: Three questions. The first one is, do you believe that [some would count] your visit at this time as the goodbye trip of the Bush government? My second question is, why have you not lots of [inaudible] between our two countries as predicted eight years ago when Bush was elected as President of the United States? My last question --

DEPUTY SECRETARY NEGROPONTE: Could you repeat that second question again?

QUESTION: Why there are not lots of [inaudible] as predicted eight years ago between the two countries. And my last question, just now when I came into this room, in front of the door I saw ice on the water. The waters are running and the ice are still on the water. Do you think this has something common with the relationship between our two countries? We are just, these eight years are even in three decades, [inaudible] business. We are stakeholders, not the problems [inaudible]. Thank you.

DEPUTY SECRETARY NEGROPONTE: On the first question, my principal purpose in coming was to participate in activities commemorating the 30th Anniversary of diplomatic relations. So that was the principal purpose. It happens to coincide, the timing, January of 2009 happens to coincide with the end of the Bush administration, so that is simply a coincidence. But it, of course, presented an opportunity on my part to pay my respects to the various counterparts with whom I have dealt during the time that I have been Deputy Secretary of State. So this was a good opportunity for me to meet with the State Councilor, Mr. Dai Bingguo, Foreign Minister Yang and others. I’ll be seeing the Vice President of China this afternoon before I leave.

On the second question, if I understood it correctly, I think you’re asking me why there hasn’t been more friction in the relationship between the United States and China, and I think the answer to that is that the relationship has matured. I think the range and depth of interests and exchanges and activities between our two countries has grown dramatically. I think that as a result on both sides, both the United States and Chinese, there is a view and a consensus that we are increasingly interdependent. That requires that we conduct the relationship on a very mature basis. That is what we have sought to do. That is what we believe to be in the mutual interest of the United States and China.

The last question I’m not sure I entirely seized the meaning of it, but I would emphasize the point that I think the relationship has expanded in scope and depth and I think that it’s a vital relationship for the United States, speaking for my country, in the years ahead. I think the next 35 years are going to witness even more dramatic growth in United States-China relations than the past 30.

QUESTION: When you talk about parities for the U.S.-China relationship in the years ahead you didn’t mention human rights, even though it’s been high on the agenda for the Bush administration since meeting with House Christians in the White House and things like that. It’s also been one of President-elect Obama’s [inaudible] as well.

Is this a sign that worries about the economic relationship have pushed the importance of making sure that stays on track have pushed other concerns particularly human rights off track? Also, related to that, 2009 is going to be a sensitive year for human rights. There are a couple of difficult anniversaries coming up for China and its diplomatic partners and how they handle them including the anniversary of the Tiananmen crackdown in 1989. I just wondered if you could comment on how the U.S. should handle these issues. Thank you.

DEPUTY SECRETARY NEGROPONTE: I think my principal point would be that we take human rights violations very seriously and when we have concerns we continue to raise them at all levels of the Chinese government. Both here in Beijing and with the Chinese embassy in Washington. So human rights, as far as we’re concerned, continues to be very much part of the United States-China bilateral agenda.

We also have an actual dialogue on human rights with China that takes place under the auspices of the senior dialogue that I have with my counterpart Mr. Dai Bingguo.

But as you suggest, there are also many many other issues in the U.S.-China relationship. We’re not trying to downplay human rights, but I’m also trying to point out that this is a very broad relationship and covering the full spectrum of human activities in the political, economic, social, educational and other fields.

So I think it’s just, it was not an intent on my part to overlook any particular one of these fields. It’s simply to say that this is a very very vast and complex relationship.

QUESTION: [Inaudible] this difficult year [inaudible].

DEPUTY SECRETARY NEGROPONTE: I’m reluctant to try and predict how the next -- This is the next to last full work week for this administration so I’d be reluctant to predict how the next administration will handle specific issues in the relationship, although since human rights and concern for human rights is a fundamental tenant of American foreign policy, I would expect to see the human rights concerns to continue in the next administration.

QUESTION: I wonder, is it clear that the SED will be continued or not?

DEPUTY SECRETARY NEGROPONTE: The Strategic Economic Dialogue. I can only carry the answer to that question so far. As I mentioned to you, I think the Strategic Economic Dialogue and the Senior Dialogue are both, have been very useful mechanisms. I think they’re part of the record of the U.S.-China relationship during the Bush administration. We think they’ve been extremely valuable. Exactly how the next administration chooses to pursue the relationship with the government of China, they’re certainly going to need mechanisms of this kind. We would recommend that they adopt these mechanisms, but this is obviously, in the last analysis, something that the new administration working in concert with the government of the Peoples Republic of China will have to decide.

QUESTION: It’s not clear yet?

DEPUTY SECRETARY NEGROPONTE: No, it’s not clear because the administration, as you may have noticed, the President-elect and his administration have avoided commenting on these kinds of questions before they actually take office, so I think we just have to wait until they take office. But I think you will learn soon enough.

QUESTION: I would like to know how was the Taiwan question addressed in your talks since there are so many interactions with the new government in Taiwan now. And secondly, since you are the last high-ranking visitor from the United States here, did you get any sort of message for the inauguration of Obama or anything of what the Chinese want?

DEPUTY SECRETARY NEGROPONTE: The question about Taiwan and how that issue was handled, I think the first thing I’d say on that was that we certainly recognize the sensitivity of the Taiwan issue and the fact that it’s an issue that needs to be dealt with with caution.

Secondly, and we did discuss the Taiwan question.

Secondly, I emphasized that the United States remains committed to its One China Policy and to the proposition that the situation across the Taiwan Strait should be dealt with peacefully.

I also made the point, and I think both sides agreed, that the cross-strait situation, there has been an improvement in that situation, particularly since the election of the new authorities in Taiwan last year, and I expressed welcome for what seems to have been a diminution of cross-strait tensions since that election and since various initiatives that have been undertaken by the government of the Peoples Republic of China and the Taiwan authorities. So I would say there’s been an improvement in that situation in the past eight or nine months.

As far as a message, I think there was no specific message although obviously one message that I take away from this visit is that the government of the Peoples Republic of China certainly looks forward to working closely with the next administration and I believe, my sense is it is eager to undertake dialogue with our new government as soon as possible.

QUESTION: Good morning, Mr. Negroponte. My question is how will the USA strengthen cooperation with China in intellectual property field? Thank you.

DEPUTY SECRETARY NEGROPONTE: That is certainly an issue of great interest to us and to both our business community and to our government. We have officials from our foreign commercial service stationed here in China. It’s our largest presence of our Department of Commerce abroad and they follow this issue very closely.

We have law enforcement concerns about intellectual property. Our law enforcement representatives here at the embassy work closely with their counterparts in the Chinese government in trying to enforce intellectual property. So I think there have been some positive developments in this area and I think there’s an increased awareness between our two governments about the intellectual property issues that we confront. But there is still a great deal of work to be done.

Thank you very much for this opportunity.

http://www.state.gov/s/d/2009/113669.htm

Released on January 8, 2009

Obama Pentagon pick cites China concern

* Reuters, Friday January 16 2009

(Recasts, adds comments from Lynn, other details)
By Jim Wolf
WASHINGTON, Jan 15 (Reuters) - President-elect Barack Obama's choice for the Pentagon's second-ranking job said on Thursday it would be tough to pay for all existing big-ticket U.S. weapons programs but called for hedging against China's growing military might.
William Lynn, who would be the deputy secretary of defense, and other Obama nominees for top Pentagon jobs did not name which programs they might seek to cut, eliminate or stretch out to meet budget constraints.
"If current trends continue, it will be very difficult to sustain a force large enough to meet the demands associated with both near-term operations and the long-term defense strategy," Lynn told the Senate Armed Services Committee that is expected to confirm his nomination.
Obama, who is to be sworn in as the 44th U.S. president on Tuesday, is retaining Robert Gates as secretary of defense. Those who would be his top lieutenants vowed to weigh every major Pentagon arms program as part of a series of overlapping strategic and tactical reviews this year.
Lynn was asked in a pre-hearing questionnaire whether current procurement plans were affordable given a history of major systems' cost overruns, the cost of current operations, planned boosts in the size of U.S. ground forces and the need to replace or fix weapons chewed up in Iraq and Afghanistan.
"I believe this is a major challenge facing the Defense Department," he responded in writing, adding that addressing these trends should be a central part of a once-every-four year review of programs, threats and strategy to be conducted by the Pentagon later this year.
Asked how the United States should respond to China's military modernization, he said he would seek to retain an "edge in areas that are critical to achieving specific operational objectives."
"The pace and scale of Chinese modernization, coupled with the lack of transparency surrounding both capabilities and intentions, are a source of concern for the United States as well as for its allies and the region more broadly," Lynn wrote. "If confirmed, I look to engage in a wide range of areas where we can encourage China to act responsibly both regionally and globally."
He also said North Korea posed a serious threat to the United States and the rest of the world through its missiles, nuclear and other deadly weapons programs, plus its "proliferation of associated technologies, materials and systems."
The would-be No. 2, who would run day-to-day Pentagon operations, said curbing U.S. arms cost overruns, which now total some $200 billion, would be a top priority for Obama's team.
"Central themes would be greater competition, stability, realism, and accountability," said Lynn, who would be coming from Raytheon Co , the world's biggest missile maker and the Pentagon's fifth-biggest supplier. "I also believe that improvements can be made through greater emphasis on, and attention to, independent assessments of costs, technology readiness levels, and testing maturity."
Improving the way the Pentagon buys weapons, a perennial challenge, could have implications for the biggest arms suppliers, including Lockheed Martin Corp , Boeing Co, Northrop Grumman Corp, General Dynamics Corp and Raytheon.
Asked about multibillion-dollar outlays for defending against ballistic missiles, the Pentagon's costliest weapons development effort, Lynn advocated a strong "testing regime" to make sure the layered shield would work as promised and be "cost-effective."
Michele Flournoy, Obama's choice to be under-secretary of defense for policy, added that U.S. missile-defense programs should be looked at "holistically" as the new administration determines its priorities.
Lynn headed Raytheon's Washington office as senior vice president for government operations and strategy.
One of the first arms-related decisions facing Obama is whether to preserve the production line for the Air Force's top-of-the-line F-22 Raptor fighter built by Lockheed Martin.
"I would expect this to be a key issue for the early strategy and program-budget reviews that the Department will conduct over the next few months," Lynn told the panel. (Reporting by Jim Wolf; editing by Derek Caney, Matthew Lewis, Tim Dobbyn)
http://www.guardian.co.uk/business/feedarticle/8265425

Was reading the Guatemala news and saw this latest from Haass.










http://www.guatemala-times.com/opini...-surprise.html
The Obama Surprise
Monday, 19 January 2009 12:28 Richard N. Haass
E-mail Print PDF

flag_burning NEW YORK - The high hopes surrounding Barack Obama's presidency are mostly a good thing, as they remind us that much of the anti-American sentiment that is so apparent around the world is not and need not be permanent.

But this anticipation is also a problem for Obama, as it will be difficult - and in some instances impossible - for him to meet expectations. There will be no Palestinian state this spring; nor will there be a global climate change pact or a new trade accord or an end to poverty or genocide or disease anytime soon.

The reasons go beyond the reality that big accomplishments require time and effort. The incoming president faces extraordinary constraints - constraints that will make it essential for other countries to do more if stability and prosperity are to be the norm rather than the exception.

The most obvious limitation stems from the state of the American economy. Two million jobs disappeared in the last four months alone. The housing market continues to deteriorate. America's GDP is contracting at an almost unprecedented rate.

As a result, Obama will have no choice but to devote the lion's share of his time and attention to reviving the economy. More than anything else, his success in this domain will determine the perception of his administration. Even he acknowledges that this will require him to delay fulfilling several other campaign promises.

A second constraint stems from all the crises that will greet the new president. Israelis and Palestinians are fighting a low-level war. The situation in Iraq is improving but is by no means assured. Obama may have to choose between attacking Iran's nuclear installations and living with an Iran that has the capacity to build a nuclear weapon in a matter of weeks. Afghanistan's government is losing ground in its struggle against a revived Taliban. Pakistan, which possesses dozens of nuclear weapons and is host to the world's most dangerous terrorists, could become a failed state, as could nuclear-armed North Korea. Many of these challenges are less problems to be solved than conditions to be managed.

A third constraint stems from trends in the international system. The era of American unipolarity is over. Obama will inherit a world in which power in all of its forms - military, economic, diplomatic, and cultural - is more widely distributed than ever before. This means that he will have to deal with a large number of threats, vulnerabilities, and independent actors who may resist bending to America's will.

All of this will make it more difficult for the United States to get things done in the world - and for Obama to have any chance of meeting the expectations being set for him - without the active assistance of others. And since Obama will want to meet some of those expectations, other countries had better be prepared for American requests - and pressure - that they act with the US rather than act against it or sit on their hands.

China will come under pressure to revalue its currency (now being held at artificially low levels) so that Chinese exports are more expensive and imports from others (including the US) cheaper. And China and other developing countries will be expected to do their share to reduce carbon emissions and slow the pace of global climate change.

European countries should be prepared for US calls to do more to meet the increasing security challenge in Afghanistan. At stake is the relevance of NATO in a world in which the principal security challenges facing Europe are to be found outside the NATO treaty area.

Countries of every sort will face requests to do their part to overcome hurdles to a new global trade accord. Tariff and non-tariff barriers will need to come down. Rich countries will be asked to reduce subsidies; poor countries to open up their markets.

Arab leaders that criticize the US for the perceived shortcomings of its policies toward the Middle East will be asked in turn how much more they are prepared to do to bolster the government in Iraq. Once the fighting between Israel and Hamas subsides, the question of what the Arab states will do to strengthen Palestinian moderates and to make peace with Israel is sure to arise.

Russia and China should expect enormous pressure from Obama to do more to discourage Iran from proceeding with uranium enrichment. This will include calls for greater political and economic sanctions, and conceivably even support for limited uses of military force to buttress sanctions.

This list is a long one, but it could easily be much longer. The rest of the world was often unhappy with George W. Bush, for both the content and style of his foreign policy. Now others will find that the alternative to America going it alone or withdrawing from the global scene is real multilateralism, which requires their willingness and ability to commit resources to deal with pressing challenges. Obama is likely to be more diplomatic than his predecessor, but he is also likely to be more demanding.

Richard N. Haass is president of the Council on Foreign Relations.

China 'wants strong links to US'


China has called for a stronger military relationship with the US.

"In this new period we hope that both China and the US could make joint efforts to create favourable conditions," a defence spokesman said.

Colonel Hu Changming, of China's Ministry of Defence, told reporters China hoped to "improve and promote military-to-military relations".

Colonel Hu's comments come as incoming US president Barack Obama is about to be sworn in to office.

China released its annual defence survey on Tuesday which noted a general improvement in China's security situation in 2008.

The US has been concerned in the past by the extent of China's military spending, which increased 18% last year, according to official figures.

China's defence report pinpointed what it called the threat of separatism in Tibet, Taiwan and Xinjiang.

It also expressed concern about how the deteriorating world economic situation might affect security, saying "issues such as energy and food are becoming more serious, highlighting deep-seated contradictions".

Two things: this is from Beijing Review, and the writer is Yuan Peng, translation-- it carries weights.


http://www.bjreview.com.cn/quotes/tx...ent_175245.htm

Obama's China Policy
Some differences might appear, but the framework of Sino-U.S. relations will not change after President Barack Obama's inauguration
By YUAN PENG

OBAMA ON POWER: U.S. President Barack Obama's China policy is expected to follow the principle of continuity, though variables are worth paying attention to (XINHUA/AFP)

Since establishing their diplomatic relationship in 1978, China and the United States have gotten used to the undulations in their bilateral relations. When former U.S. Presidents Ronald Reagan, Richard M. Nixon, George H.W. Bush, Bill Clinton and George W. Bush came into power, bilateral relations always showed sharp fluctuations.

But this time is different. During the U.S. presidential campaign last year, the topic of Sino-U.S. relations rarely came up. Instead, each candidate stressed the importance of the China-U.S. relationship and the need to maintain its stability. Therefore, the general opinion is that the framework of the Sino-U.S. relationship will not change significantly after Barack Obama enters the White House.

A stable bilateral relationship

Thirty years after diplomatic normalization, the bond between China and the United States has become pretty strong. The roles in their relations have also changed from "non-enemy and non-friend" to "stakeholder," and then to the current "constructive cooperator." The two countries now communicate at all political levels. Bilateral trade volume has grown from nearly zero to about $350 billion in 2007, creating real and deep interdependence. Moreover, the two countries have begun to explore military and security cooperation on issues like antiterrorism and the nuclear programs in North Korea and Iran. Holistically speaking, the Sino-U.S. relationship is mature and stable.

During President George W. Bush's administration, his China policy was generally accepted by both Republicans and Democrats. Obama and the Democratic Party mainly focused their criticism on Bush's policies concerning antiterrorism, Iraq, Russia and the European Union (EU), not his Asia-Pacific policy. Judging from Obama's security and economic teams, his agenda will be listed in priority order, starting with rescuing the economy, withdrawing troops from Iraq, dealing with the changing situations in Afghanistan and Pakistan, and mending U.S. relations with Russia and the EU. Therefore, Obama's China policy will follow the principle of continuity.

The Obama team's views on China are fairly practical and rational. Obama, Vice President Joe Biden and Secretary of State Hillary Clinton all show no extreme attitude toward China. Obama's Asia policy team includes many China experts, whose opinions are mostly practical and objective.

China believes the two sides have significant opportunities for cooperation. In the security area, Obama faces many challenges. Many of them, including Iraq, Afghanistan, Pakistan, and the nuclear programs in Iran and North Korea, require cooperation with China. Moreover, on many global issues such as climate change, energy, environmental protection and HIV/AIDS prevention and treatment, China and the United States have wide space to cooperate.

Since the Cold War ended, every new U.S. government has displayed the same pattern of behavior. Presidents entered office with a hard stance on China, then fell back to a more rational position after one or two years and actively developed the Sino-U.S. relationship. The Obama team is practical about China, meanwhile, academics and public opinion have created a positive atmosphere for bilateral relations.

Four variables

There are four variables that are worth paying attention to.

The first is the change in the U.S. administration. Obama's victory was of historic significance to American politics, and his opinion on China is still very hazy. Former U.S. President Bill Clinton was aware of the importance of the Sino-U.S. relationship, which is why he worked to build a constructive strategic partnership with China. His wife Hillary Clinton also recognizes the significance of bilateral ties, having once called it the most important bilateral relationship in the 21st century in Foreign Affairs magazine. But there is also the possibility that Hillary Clinton will try to step out of her husband's shadow by pushing a different policy toward China.

Biden is playing a very special role. He is a well-known expert on foreign affairs in Washington, and Obama chose him to be vice president based on his diplomatic experience. But Hillary Clinton as secretary of state complicates the situation, as her position has a greater influence over foreign affairs. Therefore, whether or not the three leaders are united will affect U.S. foreign policy, including China policy.

The second variable involves changes in government structures. The first change is with the U.S. Congress. The general election was not only a personal victory for Obama, but also a victory for the Democratic Party, which now has large majorities in both the Senate and the House of Representatives. A Democratic White House and Congress will streamline the political process. Whether the Obama administration wants to push forward the bilateral relationship, or tries to pick a quarrel with China, it will likely receive absolute support from Congress.

Relations among governmental departments also change with each new presidential administration. The U.S. State Department, Department of Defense and National Security Council have a history of fighting for dominance in policymaking. Which department gains the upper hand will affect the U.S. China policy. Entering the 21st century, other departments like the Department of the Treasury, Department of Commerce, Department of Energy, Department of Homeland Security and the various intelligence agencies are also playing more important roles.

The third variable is the shifting American political landscape. The Democratic victory resulted from public rejection of the Bush administration's policies as well as demographic changes in society. Non-white people now make up 34 percent of the total U.S. population, up from 23 percent 10 years ago. In addition, aging baby boomers are putting more pressure on the social welfare system. Beleaguered manufacturing and industrial sectors are gaining influence and calling for protectionist trade policies. All these changes will greatly affect Sino-U.S.trade and economic relations. Obama does not want to be labeled a trade protectionist, but he has to do something to soothe domestic emotions.

The fourth variable is the changing international environment, especially the world financial crisis, economic recession and other rising global issues.

The Wall Street storm hit more than the financial field. It has damaged the real economy and global economic health. And it is far from over. The Obama administration will therefore put economic recovery at the top of its agenda. If China can help Obama in this endeavor, the new president will be happy to promote and push forward China-U.S. relations. Otherwise, their bilateral relationship will be challenged.

On global issues like climate change, energy and environmental protection, the Obama administration will try to maintain dominance. It will also have growing expectations for China in these areas.

Possible challenges

The top risk is Sino-U.S. trade and economic relations. Both countries face economic challenges. Obama will be busy bailing out the market, stimulating domestic employment and improving living standards. In the meantime, the Chinese Government will engage in solving problems like unemployment among recent college graduates and rural workers, revitalizing the economy, maintaining economic growth and increasing domestic demand. Concerns on both sides will inevitably jeopardize bilateral trade and limit the flexibility of their policies.

The Obama team has made a list for China. If it cannot be fulfilled, Obama's China policy will harden. The list demands that China continue to purchase U.S. national debt, increase investment in the International Monetary Fund and strengthen coordination on reforming the China-U.S. financial system. Based on its own economic and political interests, China can only satisfy some of these requirements, which will leave an unfavorable first impression on the Obama administration.

The Democratic Party represents American workers who have lost many jobs as corporations move their operations overseas. They must press Obama harder to protect their interests. China's labor standards will come under scrutiny after topics like currency devaluation, product safety, protection of intellectual property rights and further opening financial markets.

Diplomacy will be another area with potential for disagreement. The Obama administration will first focus on shifting troops from Iraq to Afghanistan, then consider repairing U.S. relations with Russia and the EU and continue negotiating with North Korea and Iran over nuclear issues. The United States hopes China will play a constructive role and be a responsible big country on these issues. How much Beijing can share these burdens with Washington will be a touchstone with which Obama tests the relationship. The U.S. Government can also use diplomatic issues to distract attention from the economy. Based on this, the Obama administration might increase its demands-for example, asking China to send troops or capital aid to Afghanistan-while continuing to pressure China on its relations with Myanmar and Sudan. Therefore, the diplomatic relationship between the two countries could become turbulent.

Human rights and ideological issues are still prominent, but now manifest themselves in a different way. Currently, these issues center on the soft power contest between China and the United States. Obama is trying to restore the U.S. image and its hegemonic position in the world to protect American values. The potential for conflict between the two countries will not lessen in these fields.

The author is Director of the Institute of American Studies, China Institute of Contemporary International Relations

US calls China a currency manipulator

Published: January 22 2009 16:41 | Last updated: January 22 2009 17:18

By Alan Beattie in Washington and Geoff Dyer in Beijing

Tim Geithner, President Barack Obama’s designate as Treasury secretary, said on Thursday that China was “manipulating” its currency, a politically loaded term which underlines the tension between Washington and Beijing over global economic imbalances.
EDITOR’S CHOICE
http://www.ft.com/cms/s/0/54030466-e...0779e2340.html

In a written response to questions from senators, Mr Geithner, whose nomination was supported on Thursday by a clear majority of the Senate’s finance committee, said: “President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency.”

Mr Obama would “use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices,” he said.

Mr Geithner stopped short of pledging that the US Treasury would formally name China as a currency manipulator in an annual currency report, due in the spring. “The question is how and when to broach the subject in order to do more good than harm,” he said.

Mr Geithner’s nomination as US Treasury secretary was approved by the Senate finance committee on Thursday morning, clearing the way for his nomination to be brought to the Senate.

China abandoned a fixed currency peg with the US dollar in 2005 for a managed float, and since then the renminbi has appreciated by around 20 per cent against the dollar.

However, in November the Chinese authorities let the currency depreciate modestly, promting widespread speculation about a shift in policy. Since then, the renminbi has traded in a narrow band against the dollar, leading some economists to argue that a de facto peg has been restored.

Despite the gradual appreciation in the renminbi, China has continued to record large current account surpluses, which are likely to become politically controversial in a global recession. Indeed, during the fourth quarter of 2008, China’s trade surplus reached a record $114.3bn.

Hank Paulson, Mr Geithner’s predecessor, repeatedly criticized Beijing for holding down its currency but always resisted pressure from Congress to name China formally as a manipulator.

US legislation requires only that the administration starts negotiations with countries that it names as manipulators in the annual report, and Mr Paulson argued that he was negotiating with Beijing to allow the renminbi to rise in any case.

Mr Geithner’s comments came in a written response to Charles Schumer, the New York Democratic senator who has sharply criticised China for unfair trade practices and suggested imposing import tariffs on Chinese goods to compensate for currency undervaluation.

Mr Geithner’s language is likely to get a frosty response in China, where officials were already smarting from comments by his predecessor Hank Paulson, who in a recent interview with the Financial Times said that China’s large volume of savings had helped contribute to the crisis by pushing down interest rates.

In an article published in the Chinese media last week, Zhang Jianhua, head of the central bank’s research bureau, said that “wrong economic polices and improper market monitoring [in the US] are the primary reasons for the current financial crisis” He added: “Any attempts to shift the responsibility to other countries reflect an inability to develop the right attitude for seeking solutions.”

Copyright The Financial Times Limited 2009

Never a fan of Hillary, read all her works published in the Foreign Affair, not impressed by it.




Secretary of State Clinton Calls for Comprehensive US-China Dialogue
By VOA News
27 January 2009


Secretary of State Hillary Rodham Clinton during her confirmation hearing before Senate Foreign Relations Committee on 13 Jan 2009
Secretary of State Hillary Clinton during her confirmation hearing before the Senate Foreign Relations Committee on 13 Jan 2009
U.S. Secretary of State Hillary Clinton has called for a "comprehensive dialogue" with China, extending beyond economic issues.

Secretary Clinton Tuesday said U.S. economic problems mean that people are losing jobs not only in America but also in China. So Clinton said that while the economy will always be a centerpiece of the U.S. relationship with China, the new U.S. administration wants it to be part of a broader agenda.

She said the Bush administration turned the strategic dialogue with China into an economic one.

Clinton did not mention what other issues she would bring up with the government in Beijing.

Human rights activists have called for renewed U.S. pressure on China to improve its human rights record and freedom of expression.

The French news agency said groups such as Amnesty International and Reporters Without Borders, and veteran Chinese dissident Harry Wu expressed hope at a U.S. congressional hearing Tuesday that President Barack Obama will give China's human rights problem a high priority.

The Associated Press quoted Defense Secretary Robert Gates as telling a Senate hearing Tuesday that the United States is ready to handle any foreseeable military threat from China.



Some information for this report was provided by AFP, AP and Reuters.
http://www.voanews.com/english/2009-01-27-voa46.cfm

China Trip Report by Former U.S. President
Jimmy Carter: Jan. 10-16, 2009


Jan. 22, 2009



Rosalynn and I flew from Atlanta to Shanghai and then to Beijing to commemorate the 30th anniversary of normalizing diplomatic relations with Deng Xiaoping and to expand our Center's working relations with government ministries. Accompanied on the trip by Melissa Montgomery, we were met by John Hardman and Yawei Liu, and the next day joined Henry Kissinger, Zbig Brzezinski, Brent Scowcroft, six former U.S. ambassadors, and other Americans who have played important roles in China. After assembling at Ambassador Sandy Randt's residence, we participated in the opening ceremonies of a photographic exhibit covering the history of U.S.-China relations, and then I spoke at a seminar of about 200 leaders from both countries organized by the Chinese People's Institute of Foreign Affairs.


It is difficult to describe the profound changes that have occurred in China as a result of my deciding, even before inauguration, to normalize diplomatic relations. Fortunately, as president I had this unique constitutional authority. I knew that the Taiwan lobby (then equivalent to that of Israel) was adamantly opposed to any recognition of "Red China," in those days of fervent anti-Communism. Nixon had visited China in 1972, but the influence of Barry Goldwater, Ronald Reagan, and overwhelming public opinion made it politically impossible for him or Gerald Ford to consider diplomatic ties with the People's Republic of China.


We made some tentative moves in 1977, but it was not until the next year that Vice-Premier Deng Xiaoping and I began negotiating substantively. Because of inevitable leaks in the State Department, I never permitted communications other than directly to and from the White House. Deng and I announced simultaneously in mid-December that we had reached agreement and we established diplomatic relations on Jan. 1, 1979.


Two days after our public announcement, Deng revealed his plan for "Reform and Opening Up," and the impact of these two events has brought about remarkable changes during the past 30 years. China then was relatively isolated, with no free enterprise and without the right of its citizens to worship or to move from one place to another. Its economic system is now the fourth largest in the world, and it is the greatest exporter of goods. Because of the habitual trade imbalance plus our huge deficits during the Bush years, we now owe China about $800 billion. Its cash reserves are two trillion dollars, and its GNP has been increasing about 10 percent per year. It is almost overwhelming to see the dynamic changes and growth in Beijing, Shanghai, and regional centers like Wuhan.


President Hu Jintao was the first of Chinese leaders with whom we met, and all sessions began with a review of the past three decades. I also discussed a wide range of international issues and covered the work of The Carter Center in health care, elections, the Mideast, Sudan/Darfur, nuclear proliferation, future relations with the Obama administration, North Korea, and other subjects of mutual interest.


We then met with Vice-President (likely future president) Xi Jinping, and covered similar issues. In private conversations during an enormous banquet, I had a chance to explore more sensitive matters with him, including Tibet and registration of church congregations.


I spent the next morning having interviews with major Chinese news media and being briefed by our China program partners. We enjoyed a meal at the Quanjude Roast Duck Restaurant hosted by Minister of Civil Affairs Li Xueju, with whom contracts were signed to continue a long-term partnership between The Carter Center and the Chinese government. We then met with Health Minister Chen Zhu to discuss our Center's involvement in some pilot health projects in two counties and also possible cooperation in Africa. Our next meeting was with Premier Wen Jiabao in the Hall of Purple Lights, where I had first met in China with Deng Xiaoping in 1981. Wen is the equivalent of prime minister and supervises all government ministries. After a general discussion in which Kissinger and Brzezinski participated, we had a private session concerning more sensitive issues, with Rosalynn taking notes.


At Peking University Health Science Center, we joined a forum in which Drs. Don Hopkins, Frank Richards, and Ade Lucas of Nigeria, who is a member of our International Force for Disease Eradication, had been participating. I gave a fairly extensive lecture to a larger audience of leaders and medical students about our health programs in Africa, with an emphasis on how much credit the African people deserve for progress in combating Guinea worm, trachoma, malaria, and other diseases. Then I answered questions from students, who seemed to be quite idealistic, wanting opportunities to serve in poverty stricken nations. Cooperation with this large medical school (3,000 med students) is promising.


Our final meeting in Beijing was in the State Guesthouse compound where Rosalynn and I had always stayed on our earlier visits. Joined again by Brzezinski and Kissinger, we enjoyed a somewhat private supper with State Counselor Dai Binguo, who is one of the most influential officials regarding foreign affairs.


The following morning our Carter Center group flew to Wuhan and then drove to Hong'an, accompanied by Madam Li Xiaolin, vice president of the Chinese People's Association for Friendship with Foreign Countries (CPAFFC) who hosted our trip. Her father was a top general with Chairman Mao, then finance minister, and later president of China during the Reagan years. Madam Li has built modern housing for all the villagers, and an impressive memorial museum honoring her father. I spoke to a large group of local farmers, and then answered their questions about my farming, building furniture and homes, and about my personal relations with Deng Xiaoping.


We spent the night in Wuhan, continuing a regimen of two banquets each day, this one a more relaxed affair overlooking the Yangtze River, hosted by the governor of Hubei Province. Although it was below freezing, Rosalynn and I enjoyed a 50-minute walk along the river bank early the next morning. Then we visited the Hubei Provincial Museum, where we heard a concert on enormous 2,400-year-old bells that were unearthed about 30 years ago.


After flying back to Shanghai (Thursday 1/15), we attended a supper hosted by Shanghai Communist Party leaders. They were deeply concerned by the failure of the U.S. to prepare a pavilion for the Shanghai 2010 Expo (World's Fair) to be held in the city, and inclined to blame our country for their current economic woes. The next morning we participated in another ceremony to open an exhibit commemorating the 30th anniversary. I spoke again and answered many probing questions from professors and students. John and Yawei returned to Beijing for further discussions, while we prepared to return home.


The first time I visited Shanghai, in 1949, there were only pedestrians, bicycles and rickshaws. After lunch with Consul General Beatrice Camp, we rode the magnetic-levitated train to the airport, a trip that takes an hour by automobile. Computer controlled, it left at exactly 3 p.m. and arrived at 3:07 p.m. It is the fastest train in the world, designed to run 310 miles per hour, and reached a speed of 269 mph on this short run of about 16 miles. As we flew past the Old City one centimeter above the tracks, I thought the amazing experience symbolized what is happening in China.

http://www.cartercenter.org/news/tri...a_jan2009.html

Because of the habitual trade imbalance plus our huge deficits during the Bush years, we now owe China about $800 billion

I think the trade deficit started under Clinton, but, never mind.

Gates says US ready for any China "threat"

The Associated Press
Tuesday, January 27, 2009

WASHINGTON: Defense Secretary Robert Gates on Tuesday assured lawmakers that the United States is ready to handle any Chinese military threat, even as Secretary of State Hillary Rodham Clinton called for increased U.S. engagement with Beijing.

Gates, speaking at a Senate hearing, said that U.S. forces "have the capability in place to be able to deal with any foreseeable Chinese threat for some time to come."

Clinton, meanwhile, told reporters at the State Department that the Bush administration's dialogue with China "turned into an economic dialogue," referring to former Treasury Secretary Henry Paulson's Strategic Economic Dialogue, high-level discussions that have been held twice a year starting in late 2006.

"We need a comprehensive dialogue with China," Clinton said. Economic engagement, she added, is "a very important aspect of our relationship with China, but it's not the only aspect our relationship."

The Obama administration is "going to be working together in the government across our agencies to design a more comprehensive approach that will be more in keeping with the important role that China is playing and will be playing," Clinton said.

Trade ties between the United States and China often are tense. President Barack Obama's treasury secretary, Timothy Geithner, said recently that Obama believes China is manipulating its currency, which American manufacturers say Beijing does to make its goods cheaper for U.S. consumers and American products more expensive in China.

But while the United States has pushed China to live up to what the Bush administration considered its duties as an emerging global superpower and a veto-holding member of the U.N. Security Council, Washington and Beijing find themselves increasingly intertwined in a host of crucial economic, military and diplomatic efforts.

A key worry in U.S.-China ties is Taiwan. China and Taiwan split in 1949 during a civil war, but Beijing considers the self-governed island a part of its territory and is determined to get it back, by force if necessary. The United States supplies Taiwan with weapons.

Beijing has in past years lobbed missiles in an attempt to intimidate Taiwan. China also maintains double-digit annual percentage increases in the budget for the 2.3 million-member People's Liberation Army.

Gates said the Defense Department is making good progress on developing a "number of programs" meant to counter Chinese technological advances that could "put our carriers at risk."

He did not elaborate on those programs. But he said U.S. forces are well positioned in the region, mentioning the nuclear-powered USS George Washington — a floating air base with 67 aircraft and an armory carrying about 4 million pounds (1.8 million kilograms) of bombs, which has a new home port in Japan.

___

AP writer Desmond Butler contributed to this story.

Analysis: Obama team China ties off to rocky start

The Associated Press
Friday, January 30, 2009

WASHINGTON: China recently surpassed Japan as the U.S. government's largest creditor. Any decision in Beijing to move its money would deal a dizzying new blow to an already tottering American economy. Yet relations between China and the new Obama administration are off to a rocky start.

For now, Beijing continues to lend Washington money by buying Treasurys and other U.S. government securities, helping to finance the ever-growing U.S. budget deficit. There are signs, however, that its leaders may be considering trimming these holdings as that country experiences its own economic slowdown. Strains between the two economic powerhouses seem to be growing with the change in administrations.

The latest irritants are a "Buy American" provision attached to White House-backed stimulus legislation moving through Congress and criticism of China's currency policies by Vice President Joe Biden and Treasury Secretary Timothy Geithner.

Geithner accused Beijing of "manipulating" its currency during his Senate confirmation hearing.

Biden, interviewed Thursday on the U.S. financial channel CNBC, said the Obama administration would "say to China — which occasionally the last administration was reluctant to do — 'You're a major player on the world scene economically, and you've got to play by the rules that everybody else plays by.'"

Their comments followed a move by Chinese censors to silence part of a live broadcast of President Barack Obama's inaugural address when he spoke of the U.S. struggle against communism, still officially China's guiding doctrine.

And at an economic forum in Switzerland on Wednesday, Chinese Premier Wen Jiabao blamed China's economic woes on U.S.-led Western financial institutions, suggesting "a lack of self-discipline" and "blind pursuit of profit."

The pointed words from Geithner and Biden were widely seen as an escalation of old complaints that China artificially depresses the value of its currency to bolster its exports, even though the White House has sought to play down such comments and has denied increasing friction with China.

China has allowed the value of its currency to rise by 21 percent over the past two years. American manufacturers complain the Chinese yuan is still significantly undervalued, making Chinese goods cheaper for U.S. consumers and American products more expensive in China.

As to proposals before Congress to bar foreign materials from use in stimulus construction projects, White House spokesman Bill Burton said: "We are reviewing the 'buy American' proposal, and we are committed to a plan that will save or create at least 3 million jobs including jobs in manufacturing."

China holds roughly $2 trillion in foreign exchange reserves and surpassed Japan in September as the biggest foreign holder of Treasury securities. It also has the largest single-country trade deficit with the United States, which totaled $246.5 billion in 2008 through November.

With the Federal Reserve holding short-term interest rates at near zero and suggesting it may start buying longer-term U.S. securities to help drive down home mortgage rates, U.S. government securities are becoming increasingly less attractive to foreign investors.

Washington needs a continued flow of loans to help it claw its way out of the worst financial crisis since the early 1980s, perhaps since the Great Depression of the 1930s.

Much of this demand is being met by China, Japan, Britain and Arab oil-exporting nations. Of those sources of money, China is not only the biggest lender but perhaps the least predictable.

It has been hit hard by losses in U.S. holdings it thought were conservative, low-risk investments. They include large positions in mortgage giants Fannie Mae and Freddie Mac, investment bank Morgan Stanley and in the troubled Reserve Primary Fund.

Analysts say the economic downturn in China has led leaders to put their top emphasis on protecting the domestic economy, including establishing a $586 billion stimulus plan to build new railroads, bridges and dams. China already has begun to pare back its holdings in American Fannie and Freddie bonds and is keeping tighter controls on its stash of Treasurys.

Efforts in Congress to attach a "Buy American" provison to its $800 billion-plus stimulus measure threatens to further aggravate U.S.-Chinese relations.

The $819 billion stimulus bill passed by the House on Wednesday includes a provison that requires iron and steel used in public works construction projects to be from the United States. Even more stringent language requiring U.S. products and materials in all stimulus-funded projects is expected to be debated in the Senate.

Despite its trade deficit with countries like China, U.S. exports last year were one of the few bright spots of a dire U.S. economic picture.

Trade restrictions have a history of inviting tit-for-tat retaliatory trade penalties on U.S. goods, and many economists and historians blame protectionist measures adopted in the 1930s for deepening and prolonging the Great Depression.

"Buy American provisions will no doubt inspire similar trade barriers abroad and will have the same effect of reducing global trade and therefore prospects for economic recovery," said Daniel J. Ikenson, a trade analyst with the libertarian-leaning Cato Institute think tank.

Steven Schrage, an international business analyst at the Center for Strategic and International Studies, said the passage of such sharp words between Beijing and Washington "is very disturbing. We're going to have to watch it very carefully."

Still, Schrage said he thinks it unlikely that China would pull its money out of U.S. investments because, right now, "we're still seen as somewhat of a safer bet than anywhere else in the world. It doesn't mean that the U.S. is doing well, it just means that there are not a lot of other options out there," Schrage said.

___

EDITOR'S NOTE — Tom Raum has covered Washington for The Associated Press since 1973, frequently reporting on the economy.
http://www.iht.com/bin/printfriendly.php?id=19798176

UPDATE 1-US won't unilaterally block China exports - Biden
Thu Jan 29, 2009 3:00pm EST

(Adds quotes and details)

WASHINGTON, Jan 29 (Reuters) - The United States will insist China play by international trade rules, but will not move unilaterally to keep out China's exports, Vice President Joe Biden said on Thursday.

"The policy of this administration is to say to China -- which occasionally the last administration was reluctant to do -- 'you're a major player on the world scene economically and you've got to play by the rules that everybody else plays by,'" Biden said in an interview on CNBC.

"'Not more stringent. We're not going to impose on you, or attempt to impose on you, restraints that benefit our economy inconsistent with international trade agreements that exist,'" Biden said.

U.S. Treasury Secretary Timothy Geithner angered China last week when he told senators at his confirmation hearing that China was manipulating its currency.

Biden emphasized the Obama administration has not made an official determination on that, even though Obama himself said during last year's presidential campaign that China manipulated its currency.

"The term of art that got everybody upset was manipulation. There's been no judgment based in the administration that there has been a manipulation because as you know that word triggers within trade agreements certain responses," Biden said.

"But it is clear that there has been a policy of the part of the Chinese government, that I would argue is inconsistent with their long-term economic well being, of having a total export economy and doing things that guarantee that, promoted that," Biden said.

"So we're going to be, in that sense, blunter with the Chinese about 'you're in the deal, you play by the rules,'" Biden said. (Reporting by Doug Palmer; editing by Sandra Maler)