Top China official tells US not to politicise trade,
(Reuters)
Updated: 2006-02-14 11:32

China wants to work with the United States to reduce its bilateral trade surplus, but Washington will not help if it tries to make political capital out of the issue, an influential law-maker and economist said on Tuesday.

Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, or parliament, said China and the United States should ease frictions in their trade ties through consultations as equal partners.

"We concede that China is running a relatively big trade surplus with the United States, but they shouldn't politicise the issue," Cheng told a China-US business forum.

He was speaking a day after the administration of President George W. Bush, facing rising political pressure over the record US trade deficit, urged China to further free up its currency to steer growth away from exports and towards home-grown demand.
Cheng said the two countries should start by redoubling efforts to agree on the size of the problem.

China reported its surplus with the United States last year at US$114.2 billion. Washington put its deficit with China at $201.6 billion.

The discrepancy is largely because the United States counts exports shipped through Hong Kong as originating in China.

Beijing says this is unfair because none of the value added in Hong Kong accrues to Chinese firms.

The United States also counts the cost of shipping and insuring exports in its figures. Again, China counters that this is unfair because most of the business goes to non-Chinese firms.

Cheng urged Washington to acknowledge the benefits it reaps from trade with China. He quoted a study by U.S. investment bank Morgan Stanley estimating that US consumers had saved US$600 billion in the past decade from buying goods made in China.

China had also ploughed a lot of the earnings from its trade surplus into US  bonds, helping to lower interest rates for American home buyers, Cheng said.

He called on the United States to help reduce its deficit with China by relaxing rules on high-tech exports, which Washington fears could be adapted for military purposes.

China sourced only 10 percent of its high-tech imports from the United States, he said. This was not enough. China had to be allowed to buy more than Boeing Co. aircraft.

"If the United States doesn't want to export, how can we achieve balance in our trade?" Cheng asked.

Cheng acknowledged that workers in textiles and other manufacturing industries had lost their jobs because of cheaper imports from China.

But he said that those jobs would not come back; in the absence of China, other low-cost producers such as Mexico would fill the gap.