Honeymoon over in US trade talks with China

Fourteen months ago, the US Secretary of Commerce, Ron Brown, bounded on to the stage in Peking waving a list of nearly $6bn (pounds 4bn) of new deals for American companies, trumpeting a new era of "commercial diplomacy" and patting himself on the back for China's decision to resume the bilateral human rights dialogue.

That was then. Yesterday it was a more sober Mr Brown who admitted that Sino-US official contacts "cannot be expected to produce instant results". There were no photo-opportunity contract signings, perhaps because it has emerged this week that more than $5bn of last year's "deals" have yet to be consummated. There was no indication that China had offered Mr Brown any firm commitments to open its markets, or to adhere to this year's anti-piracy pact. There was no sign of the US trade deficit with China levelling off. Nor has the supposed human rights dialogue produced any tangible results over the past year.

Such are the realities for a US official on his or her second visit to China. But Mr Brown is the highest-level American official to come to Peking since June, when the Taiwanese President, Lee Teng-hui, visited the US, scuppering Sino-US relations. So the Secretary of Commerce was anxious yesterday to set a constructive tone for next Tuesday's meeting in New York between President Bill Clinton and his Chinese counterpart, Jiang Zemin. "The centrality of this relationship and our absolute commitment to making it work is often easy to lose amid the stories about week-to- week problems," Mr Brown told the American Chamber of Commerce in Peking.

In his meeting with President Jiang yesterday, Mr Brown delivered a message which, he said, "clearly indicates President Clinton's view of the importance of the relationship". Talking to Associated Press after the meeting, Mr Brown was upbeat: "I came at a time when if there was continued extension of tension in our relationship the Chinese would have had the opportunity to communicate it to me, and they didn't."

Despite Mr Brown's optimism, most of the traditional points of friction will still be on the table next week when the two presidents meet. Lee Sands, the assistant trade representative, warned earlier this month that the US expected its trade deficit with China to reach $38bn this year, and as much as $50bn next year. Mr Brown refused to make his own forecast, but admitted: "The trade deficit is too high."

Mr Brown said he was lobbying hard during this visit for up to $20bn of contracts for which American firms were bidding against international competition. But the update on last year's deals was less than overwhelming. "We too are frustrated by the lack of progress.... Not a single major private power project has come to fruition in China. Not one."

Apart from obstructive Chinese bureaucracy, the main stumbling block has been financing and the issue of whether Peking will guarantee project debt raised by the provinces. Mr Brown said he had been assured by Chinese officials that the US projects "are moving through the process".

Peking, for its part, accuses the US of blocking its application to join the World Trade Organisation (WTO). Entry to the WTO has become the most powerful tool for the US to force open China's market, and yesterday Mr Brown repeated that China's entry must be "on commercial terms".

In a positive sign for Peking he added: "It is hard to conceive of a WTO in 1996 that does not include China."

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