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The Honolulu Advertiser
Posted on: Friday, May 11, 2001

China says spy plane incident won't undermine U.S. trade

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By Glenn Scott
Advertiser Staff Writer

A top Chinese official said yesterday that recent political tension with the United States over the downing of a U.S. spy plane will not undermine the growing business ties between the two countries.

Chinese Finance Minister Xiang Huaicheng said, "I trust there will be a resolution to the problem" regarding the U.S. spy plane incident.

Associated Press

In the first cabinet-level meeting between Chinese and U.S. leaders since the incident, Chinese Finance Minister Xiang Huaicheng met privately yesterday afternoon with U.S. Treasury Secretary Paul O'Neill.

Speaking at a packed Asian Development Bank forum at the Hawai'i Convention Center before the meeting, Xiang characterized the friction over the downed plane on Hainan island as little more than the latest in a string of minor political differences.

"The troubles this time are no larger than in previous cases," he said through an interpreter. "There have been satisfactory resolutions in the past ... and I trust there will be a resolution to the problem at present through consultation."

Xiang said the bank meeting, which pulled together top finance officials from the bank's 59 member countries, offered an important window for such informal discussions.

"That's why Secretary O'Neill and I decided that we needed to talk," he said. "We want to take the opportunity at this meeting."

U.S. officials said the two leaders, however, had no plans to specifically discuss the spy plane incident. Xiang said he and O'Neill had not arranged any agenda for the discussion, but hinted that the real motive was to maintain open economic relations.

O'Neill held a brief press conference Wednesday to discuss his views on the economy as President Bush's appointee, but he did not mention private meetings with Xiang or other officials.

Xiang, in an hourlong speech on China's economy, asserted that the country is continuing to build a stable economic system, using sound fiscal policies to raise the standard of living and to attract more foreign investment. He said the country is taking prudent steps in light of a slowing world economy, but still aims to increase domestic demand as part of an overall goal to sustain a 7 percent annual growth rate.

Xiang also drew interest from listeners from Taiwan when he said that, under Beijing's "one-China" policy, Taiwan-based financial firms can do business on the mainland under many of the same rules that govern mainland businesses.

Some China experts said after Xiang's speech that his focus on economic trends — and avoidance of political analyses — reflected the gradual change in Beijing's priorities, raising matters of market economics ahead of politics.

"China has really changed from political nationalism to economic nationalism," said Kate Zhou, a University of Hawai'i professor who specializes on China's political economy.

She noted that economic policy toward Taiwan, although restricting Taiwan-based firms to use of foreign currency, nevertheless gives those businesses a head start in preparing for China's eventual membership with the World Trade Organization.

In that way, she said, the growing importance of shared economic interests across the Taiwan Straits promise to moderate more volatile political differences.

Taiwan's interest in expanding economic ties was immediately evident after the speech when the former chairman of Taiwan's central bank, Hsieh Sam-Chun, hurried to the front of the room to encourage Xiang toward further cooperation.