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The Honolulu Advertiser
Posted on: Thursday, April 13, 2006

Trade deficit with China a sore point

By Martin Crutsinger
Associated Press

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WASHINGTON — The Chinese are engaged in a multibillion-dollar buying spree of all things American, from soybeans to Boeing jetliners, and the huge U.S. trade deficit with China dropped unexpectedly in February.

But the Bush administration said yesterday that more trade concessions will be needed when President Hu Jintao visits Washington next week to quiet growing unrest over a U.S. trade deficit with China that hit $202 billion last year.

That deficit, the highest ever for the U.S. with a single country, has led to demands in Congress for punitive tariffs against all Chinese products if Beijing does not do more to halt what critics see as the country's unfair trading practices.

The complaints include accusations that China has not done enough to deal with rampant piracy of copyright products. This practice robs American computer software companies and music and movie businesses of billions of dollars in annual sales.

American manufacturers also are upset because they believe that China is unfairly depressing the value of its currency against the dollar by as much as 40 percent. Thus, Chinese goods bought by American consumers are significantly cheaper in the U.S. while American products are more expensive in China.

The trade deficit with China came to more than one-fourth of last year's record $723.6 billion U.S. deficit with all countries. Critics say the deficits are a major factor in the loss of nearly 3 million manufacturing jobs since President Bush took office in 2001.

Republicans, strong supporters of Bush's free-trade policies, are beginning to worry that they could suffer in the upcoming congressional elections unless the trade picture begins to improve.

The Chinese, seeking to placate their biggest foreign market, dispatched Vice Premier Wu Yi and 200 Chinese business executives on a $16.2 billion buying spree over the past week with stops in a number of states, including Hawai'i, to demonstrate the importance of the vast Chinese market for American companies.