China urges U.S. patience in trade talks

WASHINGTON (AP) — At high-level economic talks that wrap up Wednesday, China is urging frustrated U.S. officials to be patient as the two powers work to manage a delicate trade relationship. The United States, by contrast, is pushing for quick action.

The talks began Tuesday and could yield some results, including increased U.S. airline flights to China and a lowering of barriers to sales of American energy technology products in China.

Senior U.S. officials have tamped down expectations of major breakthroughs, however, as they described the meetings as strategic discussions, not negotiating sessions. U.S. Commerce Secretary Carlos Gutierrez said the twice-a-year talks are “all about the long-term; developing a common understanding of the future.”

Still, the U.S. side made a point of noting simmering frustration. Treasury Secretary Henry Paulson said Americans are by nature impatient people; Gutierrez described the “need to make progress in all areas as soon as possible.”

The urgency is reflected in an increasingly restive U.S. Congress, where lawmakers are considering a spate of bills that would impose economic sanctions on China. Many blame America’s soaring trade deficits and the loss of one in six manufacturing jobs since 2000 in part on claims of Chinese currency manipulation and copyright piracy.

In blunt words, Chinese Vice Premier Wu Yi cautioned the United States against making accusations.

“We should not easily blame the other side for our own domestic problems,” Wu said through an interpreter. “Confrontation does no good at all to problem-solving.”

Wu, known as a tough negotiator, said that both countries should “firmly oppose trade protectionism.” She warned that any effort to “politicize” the economic relationship between the two nations would be “absolutely unacceptable.”

Wu and her delegation were scheduled to meet privately this week with major congressional leaders.

The U.S. delegation raised the issue of food safety highlighted by such incidents as the deaths of pets who had eaten pet food made with tainted wheat gluten imported from China.

U.S. Labor Secretary Elaine Chao, briefing reporters at the end of the first day of talks, said Agriculture Secretary Mike Johanns had made a forceful presentation to the Chinese about the concerns Americans have about food safety. In response, she said, Chinese officials sought to assure the Americans that they would fully investigate any problems discovered.

Democratic Sen. Edward M. Kennedy and four other senators urged the Bush administration in a letter to get Chinese commitments to cooperate in investigations into food safety, saying that the way China currently handles the issue is unacceptable.

Paulson created the talks last year as a way to get the countries’ top policymakers together twice a year to work toward reduced trade tensions. The first meeting was in Beijing last December.

China to ink 12 bln dollars’ worth of import deals with US: report

BEIJING (AFP) – China is likely to sign import deals valued at up to 12 billion dollars with the United States next month in a bid to reduce its yawning trade surplus, state media said Wednesday.

The deals will be inked during a high-profile bilateral strategic economic dialogue in the United States in May, the China Daily reported, without giving any sources.

A proposed procurement delegation will cover a wide range of US products, from soybean and cotton manufacturing machinery to electronic goods, in its visit to Atlanta, Chicago, San Francisco and Washington, it said.

The deals are widely seen as part of the Chinese efforts to cut its huge trade surplus with the United States, which hit more than 230 billion dollars in 2006, according to US data.

The Commerce Ministry was not immediately available for comment when contacted by AFP Wednesday.

When China’s President Hu Jintao visited the United States in April last year, Chinese enterprises sealed about 16 billion dollars in deals on products ranging from soybean to aircraft, the report said.

It said next month’s strategic economic dialogue, to be co-chaired by Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson, is expected to be tense after Washington last week formally filed WTO complaints against China.

Beijing has said the US move to take China to the World Trade Organisation on copyright piracy and market access barriers would have “negative impact” on overall trade relations between the two.

China’s Foreign Reserves Rise Past $1.2T

By JOE McDONALD, AP Business Writer

BEIJING – China’s foreign reserves, already the world’s largest, have risen past $1.2 trillion, a state news agency said Thursday, amid surging trade and plans to create a multibillion-dollar company to invest some of the stockpile.

The figure, as of the end of March, represented a 37.4 percent rise over the same period last year, the Xinhua News Agency said, citing the central bank.

China’s reserves have risen rapidly as huge trade surpluses and foreign investment force Beijing to drain billions of dollars from the economy every month through bond sales to hold down pressure for prices to rise. The money is stockpiled in U.S. Treasury bonds and other foreign assets.

The government announced last month it will create a multibillion-dollar company to invest a portion of the reserves in hopes of making more profitable use of the money.

No details of the company’s size, when it will be launched or how it will make investments have been released. But economists say Beijing might allocate as much as $200 billion to $400 billion to the venture.

Figures released this week showed China’s trade surplus for the first three months of the year doubled from the same period of 2006, reaching $46 billion.

China received $15.9 billion in foreign investment in that January-to-March quarter, an 11.6 percent increase over the same period in 2006, according to the government.

Economists say the rising reserves are a sign not of financial strength but of China’s failure to balance flows of money into and out of the economy.

While investment and export revenues are pouring in, Beijing tightly controls the outflow of money, restricting outward investment by Chinese companies. Most companies and individuals need official permission to buy more than a small amount of foreign currency.

The government has been easing restrictions for approval of foreign investments and allowing banks and insurance companies to buy more foreign stocks and bonds.

Beijing also is trying to encourage its consumers to spend more, which would raise imports, narrowing the trade surplus.

Japan has the world’s second-largest reserves, which stood at $909 billion as of the end of March.

The composition of China’s foreign currency reserves is a secret. But as much as 75 percent is believed to be in U.S. dollar-denominated instruments, mostly Treasuries, with the rest in euros and a small amount in yen.

Finance Minister Jin Renqing said last month that Beijing would try to learn from the experience of other governments in creating its investment company.

Jin cited the example of Singapore’s government-owned Temasek Holdings, which has $89 billion in investments in banks, real estate, shipping, energy and other industries in Singapore, India, China, South Korea and elsewhere.

China’s current foreign holdings are believed to be earning a profit of about 3 percent a year, while Temasek says it averages an 18 percent annual return.