WASHINGTON — President Obama and Chinese President Hu Jintao said they discussed at a White House bilateral meeting on Wednesday a range of issues from military and business cooperation to trade and currency issues, even giving a nod to the completion of the Doha Round of global trade talks.
This story first appeared in the January 20, 2011 issue of WWD. Subscribe Today.
During a joint press conference, Obama said he and the Chinese president discussed China’s currency and other trade problems. Obama said he told Hu the U.S. “welcomed China’s increasing flexibility of its currency.”
“But I also had to say the [yuan] remains undervalued, that there needs further adjustment in exchange rate, that this could be a powerful tool for China boosting its domestic demand and lessening inflationary pressures in [its] economy,” Obama said.
The President said he will continue to “look for the value of China’s currency to be increasingly driven by the market,” which he noted will help ensure China does not have an “undue economic advantage.” Obama later said China has “intervened forcibly” in its currency market, noting the country spent $200 billion recently, and “that’s an indication to the degree at which it is undervalued.”
He acknowledged China has moved toward a more market-oriented system but the pace is “not as fast as we want.”
Hu did not address the accusations by Obama or other lawmakers regarding China’s currency and exchange rate policies. But he did acknowledge that he discussed “some disagreements in the economic and trade area with Obama and we will continue to appropriately resolve these.”
“We champion free trade and oppose protectionism, and we hope the Doha Round of negotiations can make early and substantive progress,” Hu said of the stalled talks aimed at lowering tariffs and other trade barriers among World Trade Organization members.
China has allowed its currency to appreciate by slightly more than 3 percent since last June, which U.S. lawmakers and the Obama administration argue is not enough. Even with all the tough talk, Obama has chosen to follow a path of diplomacy in prodding China to reform its monetary policy instead of declaring it a currency manipulator, which could lead to sanctions against imports.
Sen. Charles Schumer (D., N.Y.) and others have said they will pursue currency legislation this year that will make it more difficult for the Treasury Department to avoid labeling China a currency manipulator and also give the Commerce Department more leeway in investigating undervalued currency as an illegal export subsidy.
Another key summit topic between Obama and Hu was intellectual property rights enforcement, which has become a bigger issue in the U.S. Congress. Obama and Hu met with Chinese business leaders and 14 U.S. business executives from companies such as Microsoft Corp., Intel Corp., Goldman Sachs Group Inc., Motorola Inc., General Electric Co. and The Coca-Cola Co. earlier Wednesday. The White House said Obama told the executives that the U.S. is now exporting $100 billion a year in goods and services to China and that exports are growing nearly twice as fast to China as to the rest of the world.
He said intellectual property protection is a key area of concern for U.S. businesses.
“The Chinese government, to its credit, has taken steps to better enforce intellectual property,” said Obama, adding additional commitments were made by Hu during the bilateral meeting. “President Hu would acknowledge that more needs to be done.”
The White House said in a fact sheet that China has agreed to step up enforcement of violators of intellectual property on the Internet, including those who facilitate counterfeiting and piracy. China has also agreed to clarify the intellectual property rights liabilities of relevant third parties, such as landlords and managers and operators of markets that sell counterfeit products.
Also on Wednesday, China’s official news agency said Louis Vuitton Malletier SA was teaming up with a local government agency in Zhejiang Province to combat counterfeits. The report could not be confirmed at press time.