Hu visit stirs U.S. hope of trade progress, deals

By Doug Palmer

WASHINGTON (Reuters) – U.S. business groups hope Chinese
President Hu Jintao’s visit to the United States next week will
stir progress on troublesome trade issues and lead to new
business deals, industry officials said on Friday.

“We think he’ll probably come with a constructive message,”
said John Frisbie, president of the U.S.-China Business
Council, noting Hu is expected to deliver a major speech on
trade in Seattle on Tuesday before meeting with President
George W. Bush in Washington, D.C., the following day.

Chinese Foreign Ministry officials also have been saying
China will step up its purchases of American products in the
“coming weeks and months,” Frisbie added. “We therefore expect
to see some of those things happen” as well, he said.

Hu will tour Microsoft and Boeing facilities in Washington
state before heading to the U.S. capitol. Both are major
American exporters with a long-term stake in the Chinese
market.

China Southern Airlines signed a $1.2 billion contract on
Tuesday to buy 10 Boeing 787 aircraft. That was part of larger
deal announced in January for Boeing to sell 60 of the
mid-sized planes to six Chinese airlines.

Hu’s first official visit to the United States since
becoming China’s president two years ago comes at a fractious
time in the U.S.-China trade relationship.

The U.S. trade gap with China hit a record $162 billion
last year and is on track to surpass that in 2005.

Many U.S. manufacturers and lawmakers blame the deficit on
Beijing’s currency policies, which they say gives China
companies an unfair price advantage of 25 to 40 percent.

China recently made changes to raise the value of its
currency by 2.1 percent, but that’s not nearly enough, said
Frank Vargo, vice president for international economic affairs
at the National Association of Manufacturers.

“I hope the administration will really quietly but firmly
get that message through to Hu because the Chinese now have the
mechanism to begin addressing this problem in a significant way
and it’s important they begin using it,” Vargo said.

Another irritant is China’s widespread piracy and
counterfeiting of American products ranging from CDs and DVDs
to a wide array of manufactured goods. The problem is estimated
to cost U.S. business tens of billions of dollars each year.

U.S. software companies want Hu to demonstrate the Chinese
government is sincere about recent promises to buy more
legitimate software and crack down on piracy, said Emery Simon,
counsel for the Business Software Alliance.

“That’s clearly an important thing for us. The Chinese
government is a major customer of software. We have had a
problem in the past with government ministries using illicit
copies and the Chinese have made a commitment to stop that,”
Simon said.