THE UTTER FOLLY OF CHINA-BASHING

Except in the administration, opinion in Washington is hardening on China's currency. Earlier this month, as the Treasury declined to name China a "currency manipulator" in its twice-yearly report on the matter to Congress, a new China-bashing law was put before the Senate. This measure, introduced by Democrats Max Baucus and Charles Schumer and Republicans Charles Grassley and Lindsey Graham, proposes to treat China's currency undervaluation as an illicit subsidy and seek redress through anti-dumping duties and other sanctions.

The bill has wide support on Capitol Hill – enough, the sponsors hope, to overcome a presidential veto. More surprising, perhaps, are the many calls for confrontation from disinterested economic experts.

The normally consensus-seeking Peterson Institute, for instance, is seething with impatience. In congressional testimony last month its director, Fred Bergsten, called for a new US strategy and recommended that this include a complaint at the World Trade Organisation "against China's currency intervention as an export subsidy". Mr Bergsten reminded the committee that Ben Bernanke, chairman of the Federal Reserve, had characterised China's currency policy that way in Beijing last December. (Mr Bernanke's prepared text did use the term "export subsidy", but in the speech as delivered it was cut. Back home, the excision served to underline the point rather than erase it.) 

Sure enough, the new China-bashing law follows Mr Bergsten's advice. China, it says, is an economic outlaw and must be brought to book.

So much is wrong with this approach that it is hard to know where to start. To begin with, an aggressive posture is unlikely to force China to change. The best argument for a moderate appreciation of the renminbi is that it would serve China's interests. If China's leaders are not persuaded of that, intemperate foreign demands are unlikely to change their minds.

Put that aside, though, and suppose that China did capitulate and let the renminbi appreciate briskly. What would that do to America's current account deficit? The answer is: not much. Morris Goldstein, another Peterson Institute hawk on China, acknowledges in a recent working paper* that the US economy is running at full employment, so if China's manipulated currency is exporting unemployment, those particular exports must be going somewhere else. Moreover, as Mr Goldstein points out, the renminbi's weight in the trade-weighted dollar index is just 15 per cent. A 20 per cent, appreciation would provide a meagre 3 per cent devaluation of the trade-weighted dollar. That would improve the US current account deficit, which was $850bn last year, by maybe $50bn.

Mr Goldstein says an appreciation of the renminbi might pull some other Asian exchange rates with it. That would help. A 25 per cent real appreciation against the dollar in China, Japan and the rest of emerging Asia "would probably improve the US current account position by roughly $130bn to $180bn". Suppose, then, that all this happened. Even under all Mr Goldstein's favourable assumptions America's current account deficit would be trimmed to between $670bn and $720bn. The problem is not exactly solved.

Mr Bergsten, Mr Goldstein and every other competent analyst note that a meaningful improvement in the US current account deficit will require higher private saving and a smaller budget deficit at home – variables that, unlike China's currency policy, are under the control of the US Congress. Why then give so much greater emphasis to what China needs to do? Perhaps the China-bashers think that Beijing is more susceptible to US threats than Congress is to elementary economics. Come to think of it, that might be a close call.

A quite different argument is often advanced for increasing pressure on China: that the US public will turn protectionist otherwise. Unless China is perceived to be playing fair in international trade, it is said, public opinion will demand new import barriers. For the sake of liberal trade, in other words, it is necessary to threaten China with antidumping duties and quite possibly to impose them.

At the very least, this is a paradoxical point of view – like advocating gin to curb one's appetite for alcohol. In fact it is even more absurd than it seems. Protectionist sentiment in the US is driven, in part, by the current account deficit, so it is true that measures that reduce the deficit, including an appreciation of the renminbi, would lessen the demand for import barriers. However, protectionist sentiment is also fuelled, in a far more direct way, by the account of the economy that the political class feeds to voters. What this bill tells the US public is that the flood of imports, the external deficit and the resulting downward pressure on wages in some industries (no need to dwell on the downward pressure on prices and the improvement in overall living standards that those imports also provide) are mainly China's fault.

One reason to contradict this account is that it is wrong. Another reason, for those who need another, is that leaving it unchallenged – let alone affirming it – will indeed make a turn towards protectionism more likely.

* A (Lack of) Progress Report on China's Exchange Rate Policies. www.petersoninstitute.org

Foreign Ministry: China objects to U.S. playing up ''China threat''

BEIJING, June 14 (Xinhua) -- China objects to a senior U.S. Defense Department official's remarks playing up a "China threat", said a Chinese Foreign Ministry spokesman on Thursday.

Richard Lawless, U.S. deputy undersecretary of defense for Asian and Pacific affairs, said on Wednesday China's growing military strength is breaking the balance between Chinese mainland and Taiwan and has influenced regional and even the world's balance of power, according to Chinese Foreign Ministry spokesman Qin Gang.

Testifying before the U.S. Congress, Lawless said the United States hopes to hold a strategic dialogue with China.

Qin said China has explained many times its policy of peaceful development, it defense policy which is defensive in nature and its stance on the Taiwan issue.

He said China is open and transparent on its military spending.

"We hope the U.S. side will strictly abides by its commitment to the one-China policy, which it reiterated on many occasions, observe the three Sino-U.S. communiques, oppose 'Taiwan independence' and do not send wrong signals to Taiwan secessionists by selling weapons to Taiwan," said Qin.

Qin added that China is willing to strengthen dialogue and exchanges with the United States on defense matters, in a bid to promote mutual understanding and trust.

"China hopes through these exchanges, the U.S side can have correct understanding of China's national defense policy and stance on the Taiwan issue," he said.

China, U.S. to Step Up Anti-Piracy Work

Beijing Cultural Law Enforcement Agency officers destroy pirated DVDs and CDs video and music material in the outskirts of Beijing, China Saturday April 14, 2007. China has promised to pursue product pirates identified by American authorities in a new effort to stamp out its thriving counterfeit industry, the head of the U.S. customs agency said Friday June 15, 2007. (AP Photo/Elizabeth Dalziel, FILE)

(AP) -- China has promised to pursue product pirates identified by U.S. authorities in a new effort to stamp out its thriving counterfeit industry, the head of the U.S. customs agency said Friday. The agreement comes amid mounting concern that Chinese pirates are endangering public safety in the United States and elsewhere by selling fake medicine, auto parts and other goods.

China accounted for about 80 percent of the 14,775 shipments of counterfeit goods seized at U.S. ports last year, said W. Ralph Basham, commissioner of U.S. Customs and Border Protection.

Under a memorandum of cooperation signed this week, U.S. Customs will provide China with information on the source of seized goods, and Beijing will report back within 90 days on the status of efforts to track down the counterfeiters, Basham told reporters.

"We've got to start dealing with the source of the problem. We can't expect to rely upon interdiction to be our tool in order to stop these products," Basham said.

China has long been the world's leading source of illegally copied goods ranging from designer clothes to movies and music. But concern about possible danger to the public has risen following the discovery of a toxic chemical in Chinese-made toothpaste.

Basham said his talks with Chinese officials did not touch on tainted products, which he said was the responsibility of the U.S. Food and Drug Administration. He said the FDA was in touch with Chinese officials.

Under foreign pressure, China has increased penalties for piracy and launched repeated crackdowns. But business groups including the U.S. Chamber of Commerce and the Motion Picture Association of America say the scale of piracy is growing faster than enforcement.

Basham met with his Chinese counterpart, Mu Xinsheng, and other officials this week.

Basham said American officials offered China help with security for the 2008 Beijing Olympics. He said that might include support from a U.S. program used at several foreign airports to identify travelers who might be barred from the United States.

U.S. tightens controls on exports to China

Over the objections of major companies, the Commerce Department adds to a list of products requiring licensing for security reasons.

Despite protests from major U.S. corporations, the Bush administration on Friday tightened regulations governing the export to China of aircraft engines, high-performance computers and other technologies that have possible military uses.

The Commerce Department added 31 products to a list that requires special export licenses in hopes of keeping them out of the hands of China's military. The licenses, which companies complain are complicated to obtain, are meant to ensure that technology sold to civilian firms doesn't end up being used to improve Chinese missiles and other weapons.

Administration officials say they are trying to balance economic needs with growing concerns about the communist nation's rapid military modernization and access to advanced Western technology. But U.S. businesses say the new rules, proposed last summer and sharply criticized ever since, won't be effective because many of the so-called dual-use products are easily available from other countries.

All the regulations will do, companies fear, is drive away Chinese business when the U.S. trade deficit with the world's most populous nation is soaring. It reached a record high of $233 billion last year.

The rules change "puts American companies at a disadvantage," said William A. Reinsch, president of the National Foreign Trade Council, which represents companies doing business abroad. "The long-term impact will be people dropping out of the Chinese market and less trade."

Because of the rapid growth of its economy and military, China is one of the largest foreign markets for exports that require licenses. In 2006, nearly 10% of all U.S. export licenses were for sales to China, worth about $2.4 billion. U.S. companies exported $55 billion in licensed and unlicensed goods, which include products as varied as iPods and soybeans, to China last year.

Federal officials listened to some of the criticism and trimmed the number of new products on the list by about a third. For example, Commerce Department officials said they had originally planned to require licenses for some general-purpose telecommunications equipment but decided to require them only for gear that operated in extreme temperatures and could be used in space.

The U.S. government categorizes countries by their potential security threat, then limits the export of products that can be used for purposes such as waging terrorism, building missiles and developing nuclear weapons. Dozens of products are restricted for sale to China. In many cases, those items also have harmless civilian uses — high-powered computers, for example, are used in advanced weather forecasting — and U.S. officials allow the exports if firms can prove that the technology won't end up in the wrong hands.

In July the Commerce Department's Bureau of Industry and Security proposed requiring licenses for the sale of 47 additional products to China. Among them were types of computers, aircraft, semiconductor equipment, navigation systems and telecommunications components.

To offset the effect, the bureau proposed a program that would exempt sales to Chinese firms that undergo special clearance reviews to certify that they do not deal with the military.

"We seek to actively encourage legitimate civilian trade between the United States and China, even as we prudently hedge against the rapid growth in China's military capabilities," Christopher A. Padilla, assistant Commerce secretary for export administration, said in a speech in China in January.

Businesses balked, complaining that other countries were not joining the United States in the new export controls and that the "validated end user" program wouldn't work because Chinese officials were unlikely to allow the required on-site inspections of companies by U.S. officials.

A spokesman for China's Commerce Ministry strongly criticized the proposal after it was announced, urging the U.S. to drop its "Cold War mind-set."

Industry groups and affected companies such as Boeing Co., Sun Microsystems Inc. and Applied Materials Inc. urged the Commerce Department to scrap the plan or make major changes.

"Most of the stuff we build is competitively available from world market sources," said Gerald T. Young, vice president of e-business systems for Bourns Inc., a Riverside company that makes electronic switches and sensors.

"Whether a customer in China would buy it from us or a Korean source or some other source, they're going to get the product."

Companies submitted evidence about products on the new list that were easily available from other countries or even in China.

William Morin, director of government affairs for Santa Clara, Calif.-based Applied Materials, praised Commerce Department officials for removing semiconductor manufacturing equipment — its primary product line — from the proposed additions. But he said the controls on other products would work only if other countries also restricted them.

Commerce Department officials said they had pressured allies, but none agreed to go along.

"They're essentially unilateral controls," Morin said. "By their nature, they're ineffective."

China rejects U.S. products

BEIJING–Turning the tables on the United States amid growing worries over dangerous Chinese products, Beijing said Friday some health supplements and raisins imported from the U.S. failed to meet China's safety standards and have been returned or destroyed.

In Washington, a top U.S. food safety official said the Food and Drug Administration was seeking more information from its Chinese counterparts, including whether they are "bona fide, science-based findings" or in retaliation for U.S. actions.

U.S. inspectors recently have banned or turned away a growing number of Chinese exports, including monkfish containing life-threatening levels of puffer fish toxins, drug-laced frozen eel and juice made with unsafe colour additives. The U.S. FDA has also stopped all imports of Chinese toothpaste to test for a potentially deadly chemical reportedly found in tubes sold in Australia, the Dominican Republic and Panama.

Friday's announcement said Chinese inspectors in the ports of Ningbo and Shenzen found bacteria and sulfur dioxide in products shipped by three American companies.

"The products failed to meet the sanitary standards of China,'' the General Administration of Quality Supervision, Inspection and Quarantine said in a notice posted on its website.

No details were given on when or how the inspections were conducted and telephones at the administration's office were not answered Friday.

The companies were identified as K-Max Health Products Co., CMO Distribution Center of America, Inc., and Supervalu International Division.

The agency said K-Max and CMO exported health capsules, including bee pollen and bacteria-fighting supplements. Supervalu exported Sun-Maid Golden Raisins, it said. The shipments from K-Max and Supervalu have been destroyed and CMO's capsules were returned, the notice said.

The FDA's assistant commissioner for food protection, Dr. David Acheson, said U.S. officials were seeking more information.

"Whatever the motives are for this, if it's real, we want to know about it," Acheson said.

"Is it tit-for-tat? We don't know and probably won't ever know. If they found a legitimate problem with a product exported from the United States, we would want to know about it so we can look into it and fix it."

Depending on what the FDA learns, it could follow up with inspections of the companies and its own sampling and testing, Acheson said. Previously, the agency hasn't known of any problems with the companies' products flagged by the Chinese, he added.

Neil Langerman, an officer of the division of chemical health and safety of the American Chemical Society, questioned whether China's seizure was in retaliation for recent U.S. actions against Chinese products.

"There's more to this story than meets the eye. This is political," said Langerman, an officer of the division of chemical health and safety of the American Chemical Society. "I'd see what China is doing as a retaliation to what the U.S. has done.''

The Chinese announcement did not specify which contaminants were found in which products, saying only that they were found in amounts above acceptable levels, without providing details.

"Local quality officials should step up the inspection and quarantine on imported food products from the U.S.," the Chinese notice said. "Chinese importers should also clarify food safety demands in contracts when importing U.S. food products, so as to lower the trade risk.''

Langerman said only a very small percentage of U.S. food shipments have bacterial problems.

"Without seeing data, the claims, while they may in fact be valid, don't have merit," he said. "I as a scientist say, show me your data, not only your data, but how you sampled it. Did you use sterile collection techniques?"

Langerman said sulfur dioxide can be present in raisins, but said companies would not use it at high levels because it adds an eggy odour. "It's also easy to get rid of because it's a gas, so you let it dissipate," he said.

Marion Nestle, a nutrition professor at New York University, said she didn't know why sulfur dioxide would pose a problem, since it's often used to preserve raisins and other dried fruit. She said raisins would be an unlikely host to bacteria because they are dry.

"This looks like retaliation," she said, noting that the Chinese have complained that American authorities are holding their exports to food-safety standards that were never detailed.

As for the herbal supplements, Nestle said the notice was too vague to know what might be in them, though she noted the Chinese are significant exporters of herbal supplements.

Friday's announcement was the second mention in recent days of China rejecting foreign food imports. Late last month, France's Groupe Danone SA said China seized five containers of Evian water in February because of concern over high bacteria levels.

Those came after concerns spiked over the safety of Chinese food exports following the deaths of cats and dogs in the United States and Canada blamed on tainted pet food ingredients from China.

K-Max president Liei Ye did not immediately respond to a message left with the company Friday seeking comment. K-Max is a subsidiary of Kang Long Group Corp., whose website said the company began by selling Wisconsin-grown ginseng to U.S. health food stores under its K-Max brand, before expanding into China, Russia, Japan, Korea, Hong Kong, Taiwan and other markets. Kang Long has four mainland China offices and a Hong Kong branch in addition to its Pomona, Calif., headquarters, according to the site.

Supervalu International is part of Supervalu Inc., headquartered in Eden Prairie, Minn. The FDA said in 2000 that CMO Distribution Center of America was based in Sarasota, Fla. However, state records showed it was dissolved as a company in Florida in 2003.

China rejects U.S. imports, citing sanitary code

BEIJING - China said Saturday it had rejected a shipment of pistachios from the United States because it contained ants, the latest indication the government may be retaliating as Chinese products are turned back from overseas because of safety concerns.

The state television report, which showed inspectors wearing face masks and sealing the shipping container that held the pistachios, indicated an increasing push to show that other countries also have food safety issues. On Friday, Chinese food safety watchdog announced that shipments of health supplements and raisins from the U.S. had been returned or destroyed because they did not meet quality control standards.

China's food- and drug-safety record has come under scrutiny in recent months following the deaths of cats and dogs in the United States and Canada blamed on tainted Chinese pet food ingredients. Since then, U.S. inspectors have banned or turned away a growing number of Chinese exports — from monkfish to juice to toothpaste — because they contained life-threatening levels of toxins or unsafe chemicals.

Ecological danger cited
In the report Saturday, China Central Television said the ants found in the pistachio shipment could "cause a serious threat to trees and to the ecological environment." Part of the batch, which arrived by ship to the port of Zhongshan, will be destroyed and the rest will be returned, CCTV said, without giving any other details.

The report also showed U.S. safety certificates issued to Cal-Pure Pistachios Inc., based near Bakersfield, Calif. Messages left for the company were not immediately returned Saturday.

Telephone calls to Guangdong quarantine officials rang unanswered on Saturday.

The Web site of the General Administration of Quality Supervision, Inspection and Quarantine, China's food safety agency, showed lists of products from 2006 and 2007 that had been turned away from countries including the United States, Canada, Japan, Singapore and Italy because they did not meet Chinese standards.

France's Groupe Danone SA says China seized five containers of Evian water in February because of concern over high bacteria levels.

'Is it tit-for-tat?'
A U.S. Food and Drug Administration official said Friday that the U.S. is seeking more information on the latest cases of American products being turned away.

"Whatever the motives are for this, if it's real, we want to know about it," said David Acheson, assistant commissioner for food protection at the FDA.

An international outcry about has China's safety record has the government worried that its goods could be banned from overseas markets. The country's dismal drug safety record was underscored this week by a Chinese court's decision to sentence to death the country's former top drug regulator.

"Is it tit-for-tat? We don't know and probably won't ever know," Acheson said. "If they found a legitimate problem with a product exported from the United States, we would want to know about it so we can look into it and fix it."

Chinese regulators have urged local authorities to step up inspections of imported food products and said Chinese importers should "clarify food safety demands in contracts when importing U.S. food products, so as to lower the trade risk."

US Rights Campaigner Says China's Poor Image Could Jeopardize 2008 Olympics

John Kamm stands in his office in San Francisco (File Photo)

American human rights campaigner John Kamm says China needs to improve its poor international image if it wants the 2008 Olympics to be a success. Beijing has already started to deal with its image problem ahead of the games, as Claudia Blume reports from VOA's Asia News Center in Hong Kong.

John Kamm leads the Dui Hua foundation, a U.S.- based human rights groups focusing on China. Speaking at a luncheon in Hong Kong on Thursday, Kamm said Beijing has one major problem that could jeopardize the success of next year's Olympics: a poor international image that could lead to protests, low attendance and poor TV ratings during the games.

Kamm says there are a number of reasons for Beijing's image problem. One is international concern about China's human rights abuses. This includes the jailing of journalists and human rights defenders, the widespread use of capital punishment and the suppression of minorities in Tibet and Xinjiang.

In recent months, Beijing has also been criticized for its support of the government in Sudan. Western critics say China is not using its influence in the country to stop the violence in Sudan's Darfur region. Kamm says criticism from Hollywood stars in particular is shaping the public's opinion.

"Just in the last few days George Clooney has come out with a big anti-China statement in favor of intervening in Darfur," he said. "Meryl Streep has just joined the campaign, so Hollywood is now making this a major issue."

Kamm says Beijing is paying attention to world opinion and has already taken steps to deal with its image since it was awarded the Olympic Games. China has recently appointed a special envoy for Darfur and has temporarily eased rules for journalists working in China. The number of executions in the country dropped by 40 percent since China won the bid for the Olympics.

Kamm expects Beijing to implement more reforms before next year. He says a bill to reform China's re-education system, for example, is scheduled to be considered by the legislature in October.

"We haven't seen the draft, it doesn't seem to be satisfactory," added Kamm. "We will still see people put away without trials but there will be some improvements, and it is our responsibility as people who care about China to make sure that the bill is the best bill possible."

Kamm says there are a number of constraints preventing Beijing from introducing more reforms. One is the 17th Communist Party congress, which is scheduled later this year. Kamm says China's leaders do not want to appear to be bowing to Western critics ahead of the congress.

Paulson stands up for strategic talks with China

Hank Paulson, US Treasury secretary, on Tuesday defended his strategic economic dialogue with China against charges it has achieved little.

Mr Paulson won support from James Baker, a former Treasury chief and secretary of state, who called for intensive engagement to minimise the risk of confrontation with China.

Mr Paulson told the Heritage Foundation the "task of the SED is long-term, and that is difficult in a town where short-termism is the order of the day".

Challenging reports that highlighted limited progress at last month's summit in Washington, he said: "This . . . misses the point." To get results "we must build relationships and take smaller, deliberate steps forward to create momentum for greater change".

The third meeting of the dialogue will be held in December.

Mr Paulson said the growth of China's foreign exchange reserves and trade surplus made a change to China's exchange rate more urgent than ever. The US trade deficit with China widened 15 per cent to a record $232.5bn in 2006.

"While currency reform is not going to eliminate our trade deficit, a market-determined exchange rate that reflects the underlying fundamentals of the Chinese economy is one component of the actions needed to address imbalances.''

Anger at China's currency policies has prompted members of Congress to introduce about six pieces of legislation aimed at China.

Mr Paulson said China could help him head off protectionist legislation in Congress.

"The more progress they make to open up their markets, the easier it is for me to fight the battles I have to fight to keep our markets open,'' he said.

"I'm going to be more effective in the administration if we have more progress in China.''

In a speech to the US-China Business Council, Mr Baker called for intensive engagement.

The "fundamental truth" was that "China can no more displace the US than the US can contain China".

China Rejects US Health Warning on Toothpaste

China is rejecting a U.S. government warning about Chinese-made toothpaste that contains a potentially poisonous chemical commonly used in antifreeze.

China's General Administration of Quality Supervision, Inspection and Quarantine says the advisory from the U.S. Food and Drug Administration is unscientific and irresponsible.

China says low-levels of the chemical, diethylene glycol, have been approved for consumption. It also says the U.S. food regulator has approved all Chinese-made toothpaste exported to the United States.

On Friday, the U.S. government warned consumers to avoid using toothpaste made in China after the FDA found diethylene glycol, or DEG, in a shipment seized at the border and in two U.S. retail stores.

The FDA said it is not aware of any reports of poisoning from the toothpaste, but that it is concerned about sick people and children being exposed to the chemical.

The FDA has been scrutinizing toothpaste imported from China after similar products containing the chemical killed or sickened users in Latin America.

US Defense Secretary Sounds Softer Note on China's Military Build-up

U.S. Defense Secretary Robert Gates has softened his county's rhetoric about China's military buildup, telling a regional security conference in Singapore that he sees "reason to be optimistic" about the U.S.-China relationship. Trish Anderton filed this report from Jakarta.

Robert Gates (file photo)

Gates told the Asian security conference that the United States is still concerned about what he called the "opaqueness" of Beijing's military spending.

But Gates's tone Saturday was softer than that of his blunt-talking predecessor, Donald Rumsfeld, who expressed concern over China's military buildup. Gates emphasized the common ties between the world's only superpower and the rising Asian giant, and expressed hope for better mutual understanding.

"We have increased military-to-military contacts between all levels of our militaries … As we gain experience in dealing with each other, relationships can be forged that will build trust over time," he said.

China has said its defense spending will grow by nearly 18 percent in 2007. A Pentagon report, however, concluded last month that Beijing spends two or three times more on defense than it has publicly acknowledged.

Speaking after Gates, Chinese Lieutenant General Zhang Qinsheng told the conference that Beijing is telling the truth about its budget. He said the increased spending is for items such as uniforms, training, and higher salaries and pensions.

But Zhang, too, appeared to reach out in cooperation, saying the two countries would set up a hotline to improve communication between their militaries.

Singaporean Prime Minister Lee Hsien Loong, the host of the conference, said most Asian countries do not see China's spending as a threat to regional security.

Nevertheless, Singapore and other Asian nations want a continued U.S. military presence in the region as a guarantee of stability and a counterweight to rising Chinese influence.

Secretary Gates sought to reassure the audience that the U.S. would not be distracted from its responsibilities in Asia by the military actions in Iraq and Afghanistan.

"We are an Asian power with significant and long-term political, economic and security interests. Our commitments elsewhere notwithstanding, we will fulfill our commitments in Asia," he said.

He called on Asian nations to increase their aid to Afghanistan and the former Soviet states of Central Asia, arguing that if those countries were allowed to flounder, they could become breeding grounds for terrorism.

China to catch up with US economy - world poll

China is on course to catch up with the United States and join the front ranks of world economic powers, but that is little cause for concern even among Americans, a global survey said Monday.

Most respondents in 13 countries agreed it was "likely that someday China's economy will grow to be as large as the US economy," according to the opinion poll by the Chicago Council on Global Affairs and WorldPublicOpinion.org.

"What is particularly striking is that despite the tectonic significance of China catching up with the US, overall the world public's response is low key -- almost philosophical," said Steven Kull, editor of WorldPublicOpinion.org.

But the poll showed there is also distrust of China to "act responsibly" in world affairs. 

In no country was there a majority who felt that China's economic rise would be mostly negative, but that was not because China is particularly trusted, the pollsters said.

Majorities in 10 out of 15 countries said they did not trust China "to act responsibly in the world." But the same number also said they distrusted the United States.

"Though people are not threatened by the rise of China, they do not appear to be assuming that it will be a new benign world leader," Kull said.

"They seem to have a clear-eyed view that China is largely acting on its own interests."

The Chinese themselves are among the more skeptical populations, with only half saying that their economy will catch up with the United States'. Among Americans, the percentage was 60 percent.

Only in India and the Philippines did a plurality of respondents say the United States would always remain a bigger economy than China.

The highest level of concern about the implications of China's economic march was in the United States, where one in three is worried.

But 54 percent of Americans said that its rise would be "neither positive nor negative" while one in 10 said it would be mostly positive.

Only in Iran did a majority -- 60 percent -- say that it would be "mostly positive for China to catch up."

The survey included 18 countries: Australia, Argentina, Armenia, China, France, India, Iran, Israel, Mexico, Peru, the Philippines, Poland, Russia, South Korea, Thailand, Ukraine, and the United States, plus the Palestinian territories.

Not every question of the poll was asked in each country, so that the results for some questions covered less than 18 countries.

US, Chinese Officials Discuss Difficult North Korean Funds Issue

The chief U.S. negotiator on North Korea's nuclear programs has been meeting with Chinese officials in Beijing to try to resolve problems in transferring money from a Macau bank to North Korea. Pyongyang has refused to resume six-nation talks on its nuclear weapons program until it has possession of the $25 million in the previously frozen accounts, and the U.S. official stays it still might take some time. Daniel Schearf reports from Beijing.

Christopher Hill talking to reporters in Beijing, 30 May 2007

Assistant Secretary of State Christopher Hill met Wednesday with his Chinese counterpart to six-nation talks, Wu Dawei, to see if they can find a way to transfer the money and resume negotiations to end North Korea's nuclear programs.

The six nations, which include also South Korea, Russia, and Japan, agreed in February to a preliminary timetable for North Korea's nuclear disarmament. The deal included North Korea shutting down its main nuclear reactor by mid-April, but that deadline passed with no action because the transfer was stalled. Pyongyang says it will not act until it has its money in hand.

The funds are in several North Korean accounts at Macau's Banco Delta Asia. They were frozen in 2005 on U.S. suspicions that the bank was aiding North Korean money laundering and counterfeiting.

After meeting Chinese officials Wednesday, Hill told reporters it has been difficult for any bank to move the money because of legal concerns and regulatory issues.

"I know that it's hard to believe that something technical can go on for a couple months," he said. "But it really is a technical matter, which cannot just be solved though political means, but rather needs a complex set of technical solutions which involves several agencies of government on our side. So, it's not easy."

The issue of the funds has bedeviled the disarmament process for almost two years now. After the accounts were frozen, Pyongyang boycotted the negotiations, and last October, it tested a nuclear explosive.

The North Koreans were persuaded to return to talks after the U.S. said it would work to free the Macau funds. It did so earlier this year, but still hasn't figured out how to transfer the money to North Korea.

Chinese Foreign Ministry Lashes Out at US Defense Report

China's Foreign Ministry has reacted forcefully to a U.S. Defense Department report on the expansion of China's military.

China Foreign Ministry spokeswoman Jiang Yu

Ministry spokeswomen Jiang Yu said in a statement Monday that the Pentagon's annual report exaggerates China's defense spending in an effort to play up China's military threat. She said China is a peace-loving country pursuing its right to protect its national security.

Jiang also called on Washington to stop sending what she called "wrong signals" to pro-independence forces on the self-governing island of Taiwan.

Taiwan severed ties with mainland China following a a 1949 civil war, but Beijing considers the island a renegade province.

The U.S. Defense Department report issued Friday says, despite China's military buildup, it lacks the power for a successful attack against Taiwan.

The report says China is developing sophisticated missiles, aircraft and ships, and is increasing its capacity to launch pre-emptive strikes beyond East Asia. The Pentagon says China is developing weapons to protect the country's access to resources, such as oil.

China announced plans in March to increase military spending by nearly 18 percent this year to about $45 billion. Analysts believe the actual budget is much bigger.

US TRADE WITH CHINA

Global imbalances" have been seen as a threat for so long that it's tempting to conclude that the world economy is, in fact, in harmony. That said, many things still look out of whack. From Spanish property to emerging market debt, asset prices and valuations are stretched. Consumer indebtedness, particularly in Anglo-Saxon countries, is at record levels. Other indicators, such as currency market volatility and risk premiums are well away from long-term trends. But the most commonly cited "imbalance" is the US trade deficit.

Many are blaming China and point to its ballooning surplus with the US, which now exceeds $200bn. In Washington, Congress in particular is gunning for sanctions. A simplified solution is for China to revalue its currency and, if vice-premier Wu Yi received a dollar each time this was requested at this week's bilateral talks, she could almost have returned home and solved the trade deficit single handedly.

If this is the biggest problem facing global stability, then worryingly, there appears to be no managed solution in sight. China is well aware of the negative effect that a strong renminbi would have on its export-fuelled growth and has given no ground. And it wouldn't just be Chinese companies that suffer – little is said about the hit to margins for foreign companies with significant manufacturing exposure to China. A sharp appreciation may also cause a shock to the rest of Asia, which, although receiving a step gain in competitiveness, has been grateful for cheap Chinese imports.

That means the deficit will probably have to unwind at the US end. Indeed, the US dollar has already fallen against most other currencies, particularly the euro. The most damaging "solution" would be if imports fall as a result of a contraction in consumption, possibly due to recession. And with Japan still weak, it is debatable whether Europe could support global growth alone. Best to hope these imbalances do not topple over any time soon.

TOXIC PET FOOD DOGS US-CHINA RELATIONS

Memo to Chinese food exporters: don't mess with America's pets.

It was, after all, the apparent accidental poisoning of thousands of cats and dogs that first drew widespread US media attention to the failings of Chinese food safety controls last month.

Fuelled by revelations of other Chinese food problems and reports of exports of toxic toothpaste to Central America, the resultant furore is now threatening China's fast-growing agricultural export sector.

Washington has already demanded tighter regulation of Chinese exporters. Democratic senator Dick Durbin has declared that "Made in China" has become a "warning label" for food sold in the US. And, US news agency Dow Jones last week ran a story considering the practicality of calls for a ban on Chinese food imports.

Such a heated reaction has taken Chinese observers aback. Food safety has long been an issue of consumer concern in China's richer cities, but few expected the death of a reported 16 US pets to escalate into the newest source of friction in ever-prickly Sino-US ties.

Some observers have dismissed the food scare as an effort by US interest groups to push an anti-China agenda. The overseas edition of the Communist party's People's Daily blamed US media for "stirring up" the pet food problems.

"In a moment, the US has filled the air with a 'China Food Threat Theory', the newspaper said.

Zhao Min, a corporate consultant and blogger, saw the food scare as a US effort to win ground ahead of last week's Sino-US Strategic Economic Dialogue.

"When the US government has economic talks with a foreign government, it is just like a war," Mr Zhao wrote. "The media is the air force; conducting aerial bombing to set public opinion before the talks, seizing the high ground while attacking and destroying the opponent's self-confidence."

Others see the scare more as part of a US zeitgeist where China is already seen as a challenger to US economic security and military supremacy.

Some Chinese, however, not only sympathise with the US reaction to the pet deaths – they actually welcome the attention.

China presses U.S. on food regulations

China appeared to go on the defensive Friday in response to rising concern about the safety of its food and drug exports, asking the United States to clarify its regulations on the use of antibiotics that turned up in Chinese catfish in three southern states.
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In a notice on its Web site, the General Administration of Quality Supervision, Inspection and Quarantine — China's main food safety regulator — said it had contacted its American counterpart about the use of fluoroquinolones.

In its statement, the quality inspection administration asked Washington to "deal with the problem in an objective, scientific and equitable way."

It also warned that the U.S. should not violate World Trade Organization's rules, which give countries the right to ensure food safety for consumers but not to manipulate health standards to protect domestic producers.

The Food and Drug Administration has not responded, the Chinese regulator said.

Mississippi, Alabama and Louisiana recently banned catfish from China after tests found traces of ciprofloxacin and enrofloxacin, both in the fluoroquinolone family. The antibiotics are used to treat tuberculosis, pneumonia and other illnesses in people and prevent infections in animals.

The Chinese regulator said the drugs are allowed in China, the EU and Japan — and said the FDA allows their use if below concentration levels of five parts per billion.

Officials from the Chinese agency refused to comment further on their statement, which mentioned only Mississippi and Alabama.

According to the FDA, fluoroquinolones have never been approved for use in aquaculture and any amount detected in fish tissue deems the product adulterated. Regulations against the antibiotics in food are intended to prevent bacteria from developing resistance to the drugs.

China is worried about the damage to consumer confidence in its products by a series of scandals involving tainted Chinese exports. Many of the tainted goods are produced by farmers and small factories, and a ban on their trade by importing nations would threaten jobs in a largely rural country with already high unemployment.

On Thursday, U.S. officials asked their Chinese counterparts to increase oversight of food and drug exports. The FDA also said it was stopping all imports of Chinese toothpaste to test for a deadly chemical reportedly found in tubes sold in Australia, the Dominican Republic and Panama.

The FDA also warned consumers not to buy or eat imported fish from China labeled as monkfish because it might actually be pufferfish, which contains a potentially deadly toxin called tetrodotoxin. Eating pufferfish that contains the potent toxin could result in serious illness or death, the FDA said.

Dozens of people have died in Panama after taking medicine contaminated with a chemical traced to a Chinese company. China also was the source of the toxic chemical in pet food that has killed an unknown number dogs and cats in the United States.

And China's former top drug regulator went on trial earlier this month accused of taking bribes to approve untested medicine, including an antibiotic that killed at least 10 patients last year before it was taken off the market.

The Chinese leadership has pledged to strengthen its safety controls.

"The Chinese government attaches great importance to food and drug safety. We are making efforts to improve the monitoring system of the safety of food and drug," Chinese Foreign Ministry spokeswoman Jiang Yu said at a regular briefing Thursday.

China suggests US heed own human rights

Chinese government said the latest US criticism of its human rights situation is "groundless and slanderous", and suggested US focus more on human rights problems within its own boundary.

US should stop its erroneous activities of interfering in other countries' domestic affairs with the excuse of human rights, a spokesman of China's Foreign Ministry said on Saturday.

Foreign Ministry spokesman Qin Gang said the China section of the US State Department's annual report on US efforts to support democracy worldwide "turned a blind eye to solid facts, attacking irresponsibly China's human rights."

"We repudiate the human righs report of the US Department of State, which ignores basic facts, slanders and attacks China's human rights situation," he said.

"We express our strong dissatisfaction and firm opposition," Qin said in a statement posted on the Ministry's Web site. "A lot of efforts have been made to expand democracy and reinforce the rule of law in China. Human rights in China have made new progress constantly."

The international community has spoken highly of China's human rights practice, the spokesman said.

The US report, released Thursday, alleged that China had continued to deny citizens basic election rights, and law enforcement authorities neglected and suppressed the legitimate rights of its citizens. It also alleged there were an increased number of cases in which officials harassed reporters, activists and defense lawyers seeking to exercise their lawful rights.

China said the US should pay more attention to its domestic human rights situation.

"It's the consensus of the international community that the U.S is not qualified to be the 'human rights guard' at all," Qin said. "We strongly advise it to focus more on human rights problems within its own boundary and stop its erroneous activities of interfering in other countries' domestic affairs with the excuse of human rights."

In March, China issued a report in response to US criticism of its human rights in which it accused Washington of trampling on Iraq's sovereignty. It also said the US used its campaign against terrorism as an excuse to torture people around the world and had seriously violated the rights of its own citizens.

U.S.-China Strategic Economic Dialogue in Washington

China's Vice Premier Wu Yi (L) and U.S. Treasury Secretary Henry Paulson deliver their statements at the conclusion of the U.S.-China Strategic Economic Dialogue in Washington May 23, 2007.

China's Vice Premier Wu Yi delivers her statement at the conclusion of the U.S.-China Strategic Economic Dialogue in Washington May 23, 2007.

U.S. Treasury Secretary Henry Paulson (R) and China's Vice Premier Wu Yi leave the podium after giving statements at the conclusion of the U.S.-China Strategic Economic Dialogue in Washington May 23, 2007.

U.S. Treasury Secretary Henry Paulson leans over to shake hands with China's Vice Premier Wu Yi after they gave statements at the conclusion of the U.S.-China Strategic Economic Dialogue in Washington May 23, 2007.

China's Vice Premier Wu Yi listens as U.S. Treasury Secretary Henry Paulson delivers a statement at the conclusion of the U.S.-China Strategic Economic Dialogue in Washington May 23, 2007.

China and the United States yesterday signed a slew of agreements at the conclusion of two days of high-level economic talks, which Vice-Premier Wu Yi described as"a complete success".

"We have reached broad consensus and realized positive results," Wu, who led the Chinese delegation to the China-US Strategic Economic Dialogue(SED), told reporters.

The two countries agreed on a wide variety of next steps to be taken in such areas as financial services, energy and the environment, trade balance, civil aviation and innovation. As part of the opening up of the financial sector, the quota for qualified foreign institutional investors will be tripled from$10 billion to$30 billion. On the aviation front, daily passenger flights between the United States and China will more than double by 2012; and air cargo companies will have virtually unlimited access to China."Piece by piece, we are making it easier, cheaper, and more convenient to fly people and ship goods between our two countries," US Transportation Secretary Mary E. Peters said. Under the pact, US carriers will be able to operate 23 daily round trip flights by 2012, up from 10 now. Wu said that Sino-US trade relations are among the most complex and call for creativity and consultations to solve problems that may arise. She said the talks should serve a constructive purpose and keep the countries from reverting to the"easy resort to threat and sanctions". US Treasury Secretary Henry Paulson told the briefing:"While we have much more work to do, we have tangible results for our efforts thus far. "These results are like signposts on the long-term strategic road, building confidence and encouraging us to continue moving forward together." He added:"We agree that strengthening and developing our trade relations will create jobs and give our citizens a wider variety of choice and lower prices on goods. "We agree that by combining the power of our economies, we can spur further development of clean energy technology." According to a briefing by the US Environment Protection Agency on Tuesday, the two sides discussed four areas for environmental collaboration, including developing up to 15 large-scale coal-mine methane capture and utilization projects in China over the next five years and pushing ahead with the development of a low sulfur fuel policy for China. Before the next session of the SED to be held in Beijing later this year, the two nations will complete the Joint Economic Study to evaluate different policy approaches for saving energy and controlling emissions from the Chinese and US power sectors. The Chinese delegation was scheduled to meet the Speaker of the House of Representatives Nancy Pelosi yesterday afternoon; and US President George W. Bush today. The Chinese delegation will head to Seattle to visit the Boeing plant before returning home tomorrow. In the previous round of the SED held in Beijing last December, the two sides reached consensus on issues such as facilitating trade and investment, strengthening intellectual property rights and encouraging competition.

Some US Unions End Boycott of China's State-Run Labor Federation

Some U.S. labor union leaders are visiting China to end a long boycott on dealing with the country's state-controlled labor federation. The delegation will meet with Communist Party officials and give a seminar on collective bargaining. Daniel Schearf reports from Beijing.

Manager holds staff meeting with employees of Wal-Mart outlet in Beijing (Aug 2007 file photo)

Delegates from the Teamsters union and other members of the "Change to Win" federation are in China to meet with Chinese officials and the official All China Federation of Trade Unions.

The visit marks a change for U.S. unions, which previously shunned contact with China's government-run labor organization.

Critics say the Chinese federation, the ACFTU, represents the interests of management and government and seeks to prevent disputes rather than represent the interests of workers.

During their two weeks in China, the U.S. labor delegates will visit factories and ports, meet with academics, activists, and company representatives, and discuss collective bargaining at a seminar in Beijing.

Anita Chan is a research fellow at Australian National University's Contemporary China Center and an expert on labor issues in China. She says China's unions could learn from their American counterparts.

"You have very powerful pro-business interests. And, trade unions always have a problem with counteracting this," she explained. " And, with the help of foreign trade unions hopefully it will be able to strengthen itself and be able to help workers better to negotiate better terms."

China's Communist Party government does not allow unions independent of government control, and labor activists are often harassed and imprisoned.

Chan says China's labor union federation is slowly improving, but is still constrained by its socialist structure.

"In terms of grassroots activities it still needs to learn a lot," Chan said. "It does not have the capacity even if it has the political power [to do so]. And, there are constraints from the government and other bureaucracy that the ACFTU does not do more than necessary."

Change to Win was formed two years ago after the Teamsters and a major service workers union broke away from the main U.S. labor group - the American Federation of Labor and Congress of Industrial Organizations.

The union officials visiting China say members in the United States work for the same multi-national companies that now employ Chinese workers in the service, transportation, and industrial sectors.

The U.S. labor group says its visit is designed to be a "solidarity-building mission" between American and Chinese workers to "help create good jobs in the global economy."

China Warns US WTO Complaint Could Damage Trade

The Chinese government says the United States' complaints to the World Trade Organization over product piracy could damage trade relations between the two countries. The U.S. government says illegal copying of books, movies and software in China costs American companies billions of dollars a year. VOA's Kate Pound Dawson reports from Hong Kong.

Pirated materials from China are displayed during a news conference in Washington by U.S. Trade Representative Susan Schwab, not in picture, 9 Apr 2007

China's Commerce Ministry expressed "great regret" at the U.S. decision. Ministry officials say Washington has not fully taken into account China's efforts to fight copyright piracy and said the U.S. action could cause a "negative impact" on trade.

The United States plans to file complaints with the World Trade Organization over illegal copying of U.S. products in China, and over Chinese restrictions on imports of U.S. books, music and movies.

China's trade surplus with the United States hit a record $232 billion last year.

Many U.S. business leaders, labor activists, and politicians say the surplus means lost jobs in the United States. They argue it is caused, at least in part, by China's restrictive import practices, its weak currency, and its pirating of intellectual property such as movies.

Despite tough talk on both sides, the vice president of the U.S. China Trade Council in Beijing, Robert Poole, says the relationship between the two countries is strong enough to withstand such disagreements.

"A mature or a broad trading relationship has plenty of room for there to be disputes that ideally can be settled through dialogue... but if necessary can go to a third party, an objective party like the WTO, without it being a trade war or a political development," he said.

China reports its global trade surplus in March plunged almost 72 percent, to $6.9 billion, from February's level of $24 billion. The trade figure for the United States was not released.

But trade experts say the March drop probably was a one-time event that may be linked to China's plans to cut tax rebates for exports - factories may have rushed orders out early to be eligible for the rebates.

Poole says while China is trying to cut its trade surplus, it is a slow process.

"The consensus among economists seems to be that China's trade surpluses are likely to continue to grow for some time ahead," he added. "The country wishes to stimulate more domestic consumption, but that is a process that will take more time."

Poole notes that China is sending a delegation to the United States in the coming months specifically to purchase U.S. goods. He says that may help reassure U.S. businesses that China is open to imports.