China urges US to lift controls on high-tech exports

[May 10, 2011]  WASHINGTON (AP) -- China is using high-level meetings to urge the United States to allow more technology exports into the booming Chinese economy as a way of balancing trade.

The United States, meanwhile, has criticized the communist-led nation's latest crackdown on democracy advocates, arguing that long-term stability depends on respecting human rights.

Both sides issued familiar grievances at the U.S.-China Strategic and Economic Dialogue, which began in Washington on Monday, but they took pains to stress a generally positive track in relations between the two economic superpowers.

State Councilor Dai Bingguo said common interests between the world's two largest economies now make them "inseparable" and destined to grow more interdependent.

The annual two-day round of talks brings together leaders on economics, foreign policy and security. The meetings, involving scores of officials, wrap up Tuesday with news conferences.

President Barack Obama met Dai and Chinese delegation leader Vice Premier Wang Qishan after Monday's deliberations. He encouraged China to implement policies to support "balanced global growth as well as a more balanced bilateral economic relationship." On human rights, he underscored his support for freedom of expression and political participation, a White House statement said.

This year's dialogue follows a January state visit by Chinese President Hu Jintao that helped eased tensions over the U.S. arms sales to self-governing Taiwan, which Beijing regards as part of Chinese territory. The U.S. and China also have been at odds over China's intervention in currency markets, which the U.S. says has kept the value of the yuan low against the dollar, giving an unfair advantage to Chinese exporters.

Treasury Secretary Timothy Geithner on Monday softened the long-standing U.S. criticism of China's economic policies, possibly in a belief that the outside pressure was proving counterproductive.

Geithner praised China's efforts, which include a decision last June to resume allowing the yuan to rise in value against the dollar after freezing the currency's value for two years during the height of the financial crisis. The yuan has risen by about 5 percent against the dollar since last summer. American manufacturers contend the yuan is still undervalued by as much as 40 percent.

The U.S. Treasury chief still urged China to allow its currency to appreciate at a faster rate and to allow Chinese consumer interest rates to rise. Both steps could help boost domestic demand and help lower America's trade deficit, which hit an all-time high with China last year.

A Chinese official, however, blamed U.S. policies for the ballooning trade gap. Commerce Minister Chen Deming told a news conference that China's currency appreciation was being carried out in a "very healthy manner." He said the United States needed to change its own policies on high-tech sales and investment as a way to spur American manufacturing.

He took aim at the U.S. screening of Chinese foreign investment proposals, contending it was neither fair nor transparent. Most recently, the Committee on Foreign Investment in the United States rejected a takeover by private Chinese technology giant Huawei of a small U.S. computer company, 3Leaf, on national security grounds.

"We hope the United States can treat Chinese investment, including by state-owned enterprises, in a fair manner," he said.

U.S. companies have their own long list of complaints: limited access to Chinese markets, theft of intellectual property, widespread use in China of counterfeit software and problems in seeking redress through China's legal system.

At the ceremonial opening of the talks on Monday, Vice President Joe Biden and Secretary of State Hillary Rodham Clinton offered blunt criticism of China's human rights record, which Beijing regards as an internal matter. Clinton later had "very candid and honest" private discussions on the issue with Dai, U.S. officials said.

Since February, Chinese authorities have questioned or detained hundreds of lawyers, activists, journalists and bloggers after anonymous calls were made on the Internet for protests emulating those that have challenged and toppled authoritarian governments in the Middle East and North Africa. No such protests have taken place in China.

"We know over the long arc of history that societies that work toward respecting human rights are going to be more prosperous, stable and successful. That has certainly been proven time and time again, but most particularly in the last months," Clinton said.

Dai said China had made progress in the area of human rights, but he did not mention the recent crackdown.

In Beijing on Tuesday, Chinese Foreign Ministry spokeswoman Jiang Yu said, "No country is perfect in its human rights record and there is no one-size-fits-all human rights policy."

In unusually mild comments on a subject that Beijing is highly sensitive about, Jiang said, "China and the U.S. have different opinions in the area of human rights and we believe we can use dialogue to increase mutual understanding and mutual trust."

This year's talks for the first time included high-level military leaders from both nations, a move seen as a way to increase understanding between military commanders and reduce the risk of conflict. China's military has expanded rapidly in the past 15 years, deploying missiles and naval assets that could challenge American supremacy in the region.

[Associated Press; By MARTIN CRUTSINGER and MATTHEW PENNINGTON]

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