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Obama urged to ‘punch’ China

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A leading U.S. manufacturing group on Monday called on President Obama to take a tough line on China when he holds his first summit with new Chinese President Xi Jinping at the end of the week in California.

Even as Chinese companies are stepping up their acquisitions in the American market, Scott Paul, president of the Alliance for American Manufacturing (AAM), suggested the Obama administration should "punch back hard" against the Chinese for recent national security and economic intrusions of U.S. military and business targets.

Mr. Paul expressed particular concern about China's recent cyberthreats and suspected hacking of the U.S. military and American businesses, the military's dependence on suppliers in China, and Beijing's currency manipulation.

"Your meetings with President Xi come at a critical time, with an increasing number of issues on the bilateral agenda that put America's economic and national security at tremendous risk," Mr. Paul said in a letter to the White House.

Chinese officials have denied U.S. charges of cyberespionage.

Mr. Paul criticized Mr. Obama for going easy on China, and he called on the administration to take a harder line on economic issues with Mr. Xi.

"There's a myth out there that we can't get more aggressive with China, because China holds all the cards," Mr. Paul said.

"I would urge the president not to take the advice of some who have suggested that in order to move forward with China we have to set some issues aside, because there will never be agreement," he continued.

Mr. Obama "would be well advised to punch back hard on this, so there are some economic consequences, if this behavior continues," he said.

Mr. Paul pointed to a report issued by his group early in May that contended that the U.S. military has a "dangerous dependence" on Chinese suppliers for important raw materials and parts used in weapons systems. The report found that American forces rely on China for key military components, such as Hellfire missile propellant, as well as for a so-called rare earth substance known as lanthanum, which is used in night-vision goggles like the ones the Navy SEALs use.

Mr. Paul also noted long-standing U.S. complaints about China manipulating its currency to improve its trade position, which he said has resulted in U.S. firms losing billions of dollars of exports to China, because now Chinese company can produce those products cheaper.

Mr. Paul warned that the Obama administration needs to respond to these threats with economic sanctions against China. They could include the U.S. government ceasing to purchase Chinese goods, naming China as a currency manipulator, and initiating broader trade cases against the country in the World Trade Organization.

"Unless you hit China in the wallet, it has no incentive to improve," he said. "If there's some economic consequence for China, I strongly believe the Chinese would respond."

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