China calls Iowa's Branstad 'old friend' after report he picked as ambassador

[December 07, 2016]  By Dominique Patton and John Ruwitch

BEIJING/SHANGHAI (Reuters) - China said on Wednesday the governor of the U.S. state of Iowa, Terry Branstad, was an "old friend" after a report that he had accepted an offer from U.S. President-elect Donald Trump to become the next U.S. ambassador to China.

"We welcome him to play a greater role in advancing the development of China-U.S. relations," Foreign Ministry spokesman Lu Kang told a daily press briefing when asked about the Bloomberg report.

Lu did not confirm the story and said China would work with whoever became ambassador. Branstad's office could not be immediately reached for comment and Trump's office did not immediately respond to a request for comment.

If Branstad's appointment is confirmed it may help to ease trade tensions between the two countries, the world's two biggest agricultural producers, diplomats and trade experts said.

Branstad called Chinese President Xi Jinping a "long-time friend" when Xi visited Iowa in February 2012, only nine months before he became the Chinese leader.

It suggests that Trump may be ready to take a less combative stance towards the world's second-largest economy than many expected, trade experts and diplomats said.

Tensions have been worsening since Trump, who has said he intends to declare China a currency manipulator when he gets into office and has threatened to impose punitive tariffs on Chinese goods coming into the U.S., defeated Hillary Clinton in last month's election.

DUMPING ALLEGATIONS

Specific U.S. trade concerns include allegations that China is dumping steel and aluminum in global markets below the cost of production, hurting American producers. In the agricultural sector, the U.S. has been unable to get Beijing to lift anti-dumping measures on U.S. broiler chicken products and an animal feed ingredient known as distillers' dried grains (DDGS).

China is one of Iowa's biggest export markets, so Branstad is well-placed to deal with China-U.S. trade issues, Professor Huang Jing, an expert on Chinese politics at the National University of Singapore.

"This really sends a message that Donald Trump wants to handle China at the bilateral relationship level," he said.

Branstad's personal ties with Xi could also help to ease U.S. access to Beijing's leadership, the diplomats and trade experts said.

Governor of Iowa Terry Branstad exits after meeting with U.S. President-elect Donald Trump at Trump Tower in Manhattan, New York City, U.S., December 6, 2016. REUTERS/Brendan McDermid

Still, they said his many years running Iowa, the top U.S. state for production of corn, soybeans and pigs, may not have prepared him for the more delicate tasks of diplomacy with Beijing.

During Xi's 2012 trip, Chinese soybean buyers announced they would buy more than $4 billion in U.S. soybeans that year.

Since then, the United States has grown more reliant on China's voracious appetite for commodities to spur demand for everything from oil to corn as global oversupply has hurt prices. Volumes of U.S. agricultural exports to China hit record levels in 2015.

"It's natural that they should continue this good relationship with China," said Pan Chenjun, senior analyst at Rabobank in China.

Trump had been scheduled to meet Branstad on Tuesday, his transition team said earlier, without elaborating.

Trump's dealings with China have been in particular focus since Taiwan President Tsai Ing-wen called him last week to congratulate him on winning the election.

The call raised consternation in Beijing, which sees the self-ruled island as a renegade province and objects to other governments dealing with it.

Trump's conversation with Tsai was the first such contact with Taiwan by a U.S. president-elect or president since President Jimmy Carter adopted a "one-China" policy in 1979, recognizing only the Beijing government.

(Reporting by Sangameswaran S in BENGALURU, Christian Shepherd in BEIJING; Editing by Robert Birsel and Martin Howell)

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