Efforts to politicise trade tensions fuel mistrust

PUBLISHED : Monday, 28 May, 2007, 12:00am
UPDATED : Monday, 28 May, 2007, 12:00am

It should come as little surprise that the two-day top level economic talks between Washington and Beijing have been viewed through the prism of a glass half filled with water.

Beijing has agreed to open up further its financial services to foreign investment, an aviation deal which will double flights between the mainland and the United States by 2012 and expand co-operation on energy and trade in environmental goods and services between the countries.

But, as usual, US officials and the media focused on the half-empty part, lamenting that the talks led by Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson had yielded 'limited' progress.

Ms Wu and other mainland officials, however, hailed the talks as 'a complete success', touting the concessions Beijing has made and deals totalling more than US$30 billion signed in a trade mission ahead of the talks.

As widely expected, there have been no new commitments on the yuan, which was not even mentioned in the closing statements.

Washington's good cop/bad cop routine did not work well. The bad cops - the US lawmakers - have stepped up and signalled that they will proceed with legislation punishing Beijing for its currency policies.

All this means that the bilateral economic and trade relations are likely to get more volatile in the coming months, particularly as the US enters its presidential election cycle, and China becomes an easy target.

The US Congress' efforts to politicise the bilateral trade tensions can lead only to deeper misunderstanding and mistrust between the two sides. Even the mainland's buying spree of more than US$30 billion, which is clearly aimed at showing goodwill, did not go down well with US lawmakers, some of whose assertions bordered on the ridiculous.

Some have claimed that the buying mission, including Beijing's decision to purchase a US$3 billion stake in the private equity firm Blackstone Group, could raise national security concerns - although they failed to explain how the non-voting stake in a private equity firm could pose a national risk for the United States.

But those lawmakers seemed to have no objection to Beijing's investment of hundreds of billons of US dollars in US treasury bonds, which has made everything cheaper for the Americans.

Having said that, Washington deserves praise for pressing Beijing to be more open and transparent. This is particularly true for its last-minute decision to add concerns over food safety to the agenda of last week's dialogue.

Until recently, the mainland's terrible food safety record, which has been characterised by widespread poisoning from tainted foods, had remained a domestic issue. That's no more. Following press reports in March that tainted pet food ingredients from the mainland were killing dogs and cats in North America, the international community appears to have woken up to a new problem.

In fact, any regular reader of this newspaper should know that tainted foodstuffs have become a part of daily life on the mainland.

Hardly a day goes by without reports of poisonings from tainted foods, from which Hong Kong suffers regularly.

Mounting overseas pressure, particularly from Washington, will force the mainland leadership to focus more attention and resources on tackling this problem.