US calls for 'more equitable' trade with China

US Commerce Secretary Gary Locke complained that China often fails to keep promises to open its markets and called for a "more equitable commercial relationship," days before China's president visits Washington.

"When I talk to business leaders across America, they continue to express significant concerns -- shared by business around the world -- about the commercial environment in China," Locke said on Thursday.

The US government also is frustrated that Chinese officials often make promies to address market access barriers or other concerns, but a year or more later, little has changed, Locke said.

"Perhaps an agreement is made, but it never becomes binding. Or perhaps there's a well-written law or regulation at the national level, but there's lax enforcement at the provincial or city level," he said.

The remarks by Locke, the latest in a series of China policy speeches by the Obama cabinet ahead of Chinese President Hu Jintao's visit next week, followed a speech on Wednesday by Treasury Secretary Timothy Geithner.

Geithner urged Beijing to move faster in allowing its currency to appreciate, to remove other trade barriers and to revise policies that forcefully tilt the China market playing field in the favor of Chinese firms.

President Barack Obama hosts Hu for a state visit on January 19. Administration officials say he will raise big geopolitical problems such as Iran and North Korea as well as the global economy, and trade issues that bedevil ties between the world's two biggest economies.

New trade figures released on Thursday showed the US trade deficit with China alone totaled USD 252 billion during the first 11 months of 2010, keeping it on track to surpass the annual record of USD 268 billion in 2008.

US China quid pro quo?

Locke echoed US companies' complaints about a host of Chinese government policies they say discriminate against foreign firms and threaten to undermine long-term US economic growth by requiring companies to transfer technology to Chinese partners in order to participate in the Chinese market.

Geithner in his speech on Wednesday rapped those Chinese policies, but extended an offer to free up trade in high-tech goods and address other Chinese concerns, provided that it saw some give from Beijing on its tightly controlled exchange rate regime and other policies.

Many US lawmakers direct their ire at China's currency policy. They contend China deliberately undervalues its yuan by as much as 15% to 40% to give its companies an unfair price advantage.

Economist Derek Scissors said Geithner's help-us-help-you approach was "reasonable" but that Washington needed to focus on bigger issues than China's nominal exchange rate.

"If we ask the Chinese to do hard things, then we're going to have to offer something else in return," he said.

Chinese officials declined to comment on Geithner's idea, but a series of advisers and analysts said that it was unlikely to jump at a trade-for-currency deal.

China has guided the yuan up by 0.4% against the dollar this week, following a well-established pattern of nudging up the currency's value before important political meetings. It gained about 3% in the second half of 2010.

Environment worries investors

Representatives of more than 100 Chinese companies will also be in town next week, setting the stage for a number of business deals that Obama could tout as helping to reach his goal of doubling US exports.

Locke declined to comment on possible deals to be signed.

The United States and China must make good on promises to reduce the huge imbalances "because they have the potential to threaten global stability and prosperity," Locke said.

"We need a more equitable commercial relationship. And it is within our reach," Locke said, acknowledging that China is already a "fairer" market for foreign companies than it was 10 years ago even though more work needs to be done.

Last month, China made a number of promises during high-level trade talks to reduce the use of pirated software and remove administrative and regulatory barriers to American sales of everything from beef to industrial machinery to telecommunications devices.

Bill Reinsch, president of the National Foreign Trade Council, whose members include Boeing, Caterpillar and other major US exporters, said the worsening commercial environment in China is causing companies to rethink where they make future investments.

"The Chinese have made no secret of the fact that they want our technology and that's the key to our competitive advantage. So, it's no surprise that companies don't particularly want to surrender that," Reinsch said.