The cyclical nature of Washington-Beijing ties is one of the enduring certainties of international diplomacy. It has hit a rough stretch yet again in recent weeks with differences emerging on trade and other issues.
US Trade Representative Robert Zoellick warned China last month that the US may erect trade barriers against Chinese products unless the Mainland is opened to more exports from the US. Zoellick's comments came during a hearing by the Senate Finance Committee regarding the Bush administration's trade policy.
The United States also drew another line in the sand by filing a complaint against China at the World Trade Organization (WTO), alleging a Mainland tax rebate for domestically produced semiconductors violated the organization's trade rules. It was the first such complaint lodged against China within the framework of the WTO.
Zoellick said in a statement that "US manufacturers of semiconductors and other products have a right to compete on a level playing field with Chinese firms."
China dismissed the US complaint as "based on a misunderstanding." The US and China must engage in discussions for at least two months before a committee will hear the complaint, according to WTO rules. The US filing claimed that China refunds up to 14% of the tax on semiconductors designed and produced on the Mainland.
US business leaders were told by US Commerce Undersecretary Grant Aldonas that a high-level trade meeting between US and Chinese officials scheduled for late April may be canceled if Beijing does not change its position on several trade issues between the two countries. Aldonas said that "it may not be worth having a meeting" unless the Chinese government moves to satisfy US demands regarding intellectual property violations and a semiconductor tax rebate.
China's decision to announce its own standard for wireless communication between computers from June 1, came in the face of strong pressure from US government officials including Secretary of State Colin Powell, as well as a number of high profile companies including Intel.
China, increasingly confident of its position as its economic strength grows, told Intel to "calm down."
In the background, China has become one of the principle punchbags of the US presidential election, with both George W. Bush and Democratic contender John Kerry seeking to benefit from the electoral dissatisfaction at job losses resulting from the shift of production out of the United States to factories in China.
Added to that is the pressure from the US side on China to revalue its currency, in order to make its exports more expensive and slow down the US job loss trend. That particular element of friction, however, was defused by Federal Reserve Board chairman Alan Greenspan who warned that a revaluation of the Chinese currency could work against the interests of the United States by potentially destabilizing the Chinese economy.
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