IMAGE: Hu Jintao
Haraz N. Ghanbari  /  AP
Chinese President Hu Jintao arrives at Andrews Air Force Base, Md., on Wednesday prior to meeting with President Bush.
By Kari Huus Reporter
msnbc.com
updated 4/20/2006 6:36:27 AM ET 2006-04-20T10:36:27

Quoting poets from both sides of the Pacific, Chinese President Hu Jintao on Wednesday told an audience of several hundred business and government leaders that the way to maintain balance in U.S.-China relations is to take a strategic, long-term view.

In a sweeping luncheon address, Hu touched on many sources of bilateral tensions, including the United States’ yawning $202 billion trade deficit with China, Chinese piracy of intellectual property and alleged manipulation of Beijing’s currency.

But after summarizing China’s efforts to solve these problems, and urging the United States to do its part, Hu sought to calm growing unease in the United States over China’s economic and political ascent.

“Trade issues should not be politicized,” he emphatically told the crowd.

Hu was on friendly turf in Washington state, which is the only American state that actually runs a trade surplus with China, owing to exports by local companies, including Boeing, Microsoft and Starbucks, which has outlets burgeoning in Chinese cities, as well as agricultural exports.

Several hundred business and community leaders were on hand for Hu’s speech — at a cost of $750 a plate, and up — and to meet the Chinese VIPs traveling in his 100-strong delegation, who were dispersed among local guests. Most in attendance wore Western-style business suits, though a few American guests donned traditional Mandarin-style garb.

Hu, his wife, Liu Yongoing, and top Chinese officials shared the dais with key government figures from the state, as well as Microsoft Chairman Bill Gates and Alan R. Mulally, president and CEO of Boeing's commercial airline division.

Warm welcome for Kissinger
But the greatest applause from the VIPs and the audience went to former Secretary of State Henry Kissinger, who was greeted by Hu with a hug. Kissinger was instrumental in arranging former President Richard Nixon’s landmark 1972 trip to China, which paved the way for the re-establishment of bilateral ties.

In a speech that repeated the substance of his comments a day earlier to a local Chinese American group, Hu vowed to help reduce the trade imbalance with the United States by expanding domestic demand.

“China does not seek a large surplus,” Hu said, pointing out that the country runs a trade deficit with Japan, South Korea and a number of Southeast Asian countries. Still, he promised his country “will further open its markets to American goods and services.”

But he also urged he United States to “take steps to promote the export of U.S. products to China,” including easing of export controls — a likely reference to a self-imposed U.S. ban on high-technology items that have potential military applications.

And Hu rejected U.S. demands that China revalue its renminbi currency, also known as the yuan.

“Our goal is to keep the renminbi exchange rate basically stable at adaptive and equilibrium levels,” Hu said.

“China will continue to firmly promote financial reforms, improve the renminbi exchange rate-setting mechanism, develop the foreign exchange market and increase the flexibility of the renminbi exchange rate,” he said.

Revaluing the yuan is a key U.S. demand, which officials say is vital to make American exports more competitive, erase an advantage Chinese manufacturers currently enjoy and reduce China’s bilateral trade surplus, which last year reached $202 billion.

China sought to quell U.S. trade complaints before Hu’s visit by signing contracts worth $16.2 billion while Vice Premier Wu Yi visited the United States last week.

Hu also talked extensively about China’s energy needs, and efforts to conserve, as well as the need to address its deteriorating environment and the growing income gap between rural and urban areas, which is increasingly a source of unrest.

He had little to say on the domestic political front, aside from a passing mention that China intends to “improve democracy.”

Hu quotes two poets
In closing, Hu quoted two poets — the American Ralph Waldo Emerson and the Chinese Tang Dynasty’s Li Bai — to talk about the need to press forward in the relationship. Most descriptive of the turbulent background to the visit was a stanza from Li’s work:

“Hoisting high the sails, I will brave the winds and waves to cross the vast oceans.”

After lunch, Hu was scheduled to leave for Washington, D.C., where he is to spend two days and meet with President Bush.

Professor Kam Wing Chan, a professor of Chinese geography from the University of Washington, said Hu didn't unveil any new policy initiatives in his speech, “but he did offer more detail and tried to reassure people on several things that Americans are concerned about.

“He also went to lengths to quote American statistics to show the benefits” of the relationship with China, he noted.

“This is the right place to send this message,” Chan noted, given Washington state’s success in its financial dealings with China.

Earlier Wednesday, Hu toured one of Boeing’s assembly plants and touted his country’s massive purchases from the company since 1972, which he said topped $37 billion in March 2006. That total includes a recently signed deal to purchase 80 737 jets from Boeing worth about $4 billion.

And, speaking to the future of flight in his country, he predicted that the booming demand from civil aviation would continue to grow.

“In fact, the plane I flew to the United States on was a Boeing,” Hu said.

Hu also was to be briefed on the new Boeing 787 jet currently under development, which the company touts as its “super-efficient airliner.”

A relaxed and ‘colorful’ Hu
Hu appeared relaxed as he toured the plant before flying to Washington, D.C., for his White House meeting with Bush on Thursday.

The remarks were delivered in a manner that a reporter from Beijing described as “very colorful” for Hu, a technocrat whose formal manner has given few clues about his personality during his three years as president. “It’s not so rigid,” China Daily reporter Li Xing said of Hu’s demeanor.

Tuesday night, Hu dined with about 100 U.S. political and corporate leaders at the home of Bill Gates, whose Microsoft Corp. has been a major victim of Chinese software piracy. (MSNBC is a Microsoft-NBC joint venture.)

In a meeting earlier Tuesday with Gates, Hu reiterated China would move against software pirates.

U.S. industry groups estimate 90 percent of DVDs, music CDs and software sold in China are pirated. The intellectual-property issue is also expected to be on the agenda when Hu meets Bush, as part of the discussion on China’s $202 billion 2005 trade surplus with the United States.

Bush has also said he intends to bring up Iran’s nuclear program. He wants China to cooperate in putting more pressure on Tehran through the U.N. Security Council.

A Chinese spokesman told reporters on Tuesday, “We hope that we will continue to work toward a peaceful resolution of the Iran issue.”

Hu said on Tuesday that China and the United States “share common strategic interests in a wide range of areas, particularly in maintaining world peace, promoting global economic growth, combating terrorism and preventing the proliferation of weapons of mass destruction.”

Reuters contributed to this report.

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