- The Washington Times - Sunday, October 19, 2003

BANGKOK (AP) — China’s rapid ascendance as a major trading nation benefits the world, Chinese President Hu Jintao said yesterday, shrugging off U.S. criticism that its currency and other policies give it an unfair advantage in global markets.

He met privately later with President Bush, who complains that the yuan is pegged too low against the U.S. dollar at the expense of the American economy and jobs.

“We both agreed that economic cooperation and trade have benefited our two peoples,” Mr. Hu said, sidestepping the issue after the meeting. Economic “questions” — apparently including exchange rates — would be resolved “through dialogue.”

Mr. Bush said nothing about the matter publicly, only that he and Mr. Hu wanted to “make sure trade is open and both countries benefit.”

Mr. Bush wants Beijing to loosen controls and let the yuan, also known as the renminbi, or “people’s money,” rise in value.

Given China’s massive economic growth and inflows of foreign direct investment, “it is quite normal for some frictions and some disputes to occur in the areas of trade,” Mr. Hu told a gathering of business executives meeting alongside an annual summit of Pacific Rim nations.

He said China’s soaring exports and fast development created a “win-win outcome” for the world.

“China has a huge market of 1.3 billion people to offer to the world,” Mr. Hu said. “China also offers much business opportunity to multinationals in the whole world.”

Asked China’s views about criticism that Beijing reaps an unfair trade advantage by keeping its currency, the yuan, linked to the U.S. dollar at a rate of about 8.28 yuan per dollar, Mr. Hu said that any other policy would be irresponsible.

Washington contends that the yuan is undervalued, perhaps by as much as 40 percent, and that this allows China to keep the prices of its exports artificially low, unfairly boosting its manufacturing competitiveness at the expense of American manufacturing jobs.

Keeping the yuan stable “serves Chinese economic performance and conforms to the requirements of economic development in the Asia-Pacific region and the whole world,” Mr. Hu said.

“We will maintain the basic stability of the renminbi exchange rate at a reasonable and balanced level,” he said.

Mr. Hu has found plenty of support here in Bangkok. China’s neighbors are in the midst of an economic rebound fueled largely by exports to the mainland, and generally would prefer not to rock the boat.

If China loosens its currency controls, the yuan actually may lose value. A sudden change could undermine already shaky, debt-burdened Chinese financial institutions, causing a massive withdrawal of investments in U.S. government debt that would imperil the U.S. economic recovery, David Hale, a chairman of the Internet company Chinaonline, told the conference.

“If we turn these currency discussions into protectionism, then we will jeopardize these financial flows,” Mr. Hale said. “If President Bush turns into a China-basher, then we’re all at great risk.”

World Trade Organization Chairman Supachai Panitchpakdi said China should be encouraged, rather than blamed.

“China’s commitments are huge commitments. Simply for that, China will need some time,” Mr. Supachai said.

Mr. Hu said China would continue to open its markets as promised under conditions for joining the WTO, which makes rules for global trade.

“We will faithfully play by WTO rules and live up to our commitments. We will open the Chinese market even wider to the outside world and we will intensify our cooperation with business communities around the world,” Mr. Hu said.

The Chinese president, who took over as chairman of the ruling Communist Party in a long-planned succession last November, noted that his nation’s foreign trade had jumped thirtyfold since it began reforming its centrally planned economy and opening to foreign investment in the late 1970s.

But he said that, when considered against the huge population, the mainland’s trade and foreign investment — which surged 21 percent over a year earlier to $53 billion in 2002 — China’s level was still low.

China’s policies of restructuring its economy, its efforts to improve management, social welfare and environmental protection — to construct what Beijing calls a “well-off society” — benefit all, he said.

“I’m quite confident that a China that is going forward and opening up is a positive force for world prosperity,” Mr. Hu added.

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