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Thursday, Sept. 30, 2004

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  The International Monetary Fund projects that the Chinese economy, which grew 9.1 percent in 2003, will expand 9.0 percent in 2004 and 7.5 percent in 2005.

"I think they will be able to manage a slowdown of the economy without a hard landing," Evans said.

U.S. exporters are eager to sell more to the Chinese market. At its meeting, PEC appointed a task force to examine why the European Union exporters ship about 50 percent more, and Japanese about 100 percent more, to China than U.S. exporters do.

From January through July, the United States ran a bilateral trade deficit with China of $83.4 billion, nearly twice as much as the next largest bilateral deficit, that with Japan.

Evans reiterated the Bush administration view that China is moving, slowly perhaps, away from fixing the value of the yuan at 8.3 to the U.S. dollar, a policy viewed as giving Chinese exporters an unfair price advantage.

The Chinese have committed to shift to a flexible exchange system by developing a currency futures market, relaxing restrictions on cross-border capital flows and restructuring their banks.

At the PEC meeting, Treasury Deputy Secretary Sam Bodman said the Chinese are looking to the United States and elsewhere for guidance on bank restructuring, realizing that their bank lenders lack the experience to make profitable loans.

"They have a big banking problem," Bodman said.

Grant Aldonas, under secretary of commerce, told the PEC meeting that, based on his visit to China earlier in September, he believes that Chinese leaders are taking seriously a commitment to crack down on piracy of copyrights, patents and other forms of intellectual property.

Aldonas said he attended a meeting where Chinese central government leaders told local law enforcement officials that they are being held accountable for stopping the proliferation of pirated compact discs (CDs), digital versatile discs (DVDs) and other illegally reproduced or counterfeit goods.

U.S. officials will not be satisfied, Aldonas said, until they see sales of legitimate U.S. products in China going up and sales of pirated products going down.

In other business, the PEC approved sending a letter to the Bush administration suggesting more government action to bolster U.S. exports to and investment in Russia.

Although the world's 10th largest economy, Russia is only the United States' 30th largest trading partner, and U.S. investment in that country stands at only about $5 billion, about the same level as for Costa Rica, according to the council.

The Bush administration was urged to work more with Russian leaders on a number of commercial interests, including rule of law, intellectual property rights protection, energy services, financial services and accession to the World Trade Organization (WTO).

(USINFO)

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