By  on April 10, 2006

WASHINGTON — Controls on China's currency and the protection of intellectual property rights are expected to top the agenda in meetings between top U.S. and Chinese officials over the next two weeks here.

Experts doubt, however, if Presidents Bush and Hu Jintao will have any substantive progress to report after their April 20 meeting at the White House.

"On currency, on intellectual property, on the trade imbalance, I think the body language from the Chinese in advance of the visit is ‘Don't expect much,'" said Nicholas Lardy, a senior fellow at the Institute for International Economics, a Washington-based think tank.

Currency looks to be the headline issue.

Economists estimate that current Chinese government controls on the yuan keep it undervalued by more than 30 percent, cutting prices on that nation's exports and making it more expensive for the rest of the world to tap into its massive market of 1.3 billion people.

In July, China made some changes to its currency policies, linking the yuan to a basket of currencies instead of just the dollar, but the move has allowed for the currency to appreciate by just over 3 percent. The Treasury Department is set to release a report this month that could label China a "currency manipulator" and lead to sanctions in the World Trade Organization.

Pressured by a $202 billion trade deficit with China, the Bush administration has also repeatedly called on China to better protect the copyrights of U.S. firms.

The diplomatic dialogue will heat up Tuesday when Commerce Secretary Carlos Gutierrez and U.S. Trade Representative Rob Portman sit down with Vice Premier Wu Yi for the annual U.S.-China Joint Commission on Commerce and Trade.

"There's a feeling that China will be letting its currency rise somewhat more in the near future," said Frank Vargo, vice president of international economic affairs at the National Association of Manufacturers.

If there isn't some movement on currency and the meetings don't produce any agreements of substance, trade tensions between the two countries might well rise.

"[No forward progress] makes the relationship more vulnerable to Congressional initiatives that may involve actual or potential restrictions on Chinese trade or cause other difficulties for the Chinese or our relationship with the Chinese," said I. M. Destler, public policy professor at the University of Maryland.Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said Chinese officials are stalling.

"They are more than pleased to wait us out," he said. "They know that in two years there will be a new administration, so they're in a mind-set here of ‘say a lot of interesting things, do virtually nothing.'"

Despite some friction, Stephen Lamar, senior vice president of the American Apparel & Footwear Association, said U.S.-Sino relations are close by necessity.

"They invest here, we buy there," he said. "Economically, our links are getting closer by the day. While there are many irritants, there continues to be a very strong symbiotic relationship."

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