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

Posted on: Friday, 2 September 2005, 15:14 CDT

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.

Source: REUTERS

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