Product Safety to be Discussed at China Talks, Vows U.S. Treasurer

December 7, 2007

Treasury Secretary Henry Paulson said that U.S. worries about Chinese product safety will be a major topic at high-level economic talks with China next week.

The so-called Strategic Economic Dialogue comes as the United States pushes China to improve the safety of its exports in light of a string of high-profile recalls of various items as wide-ranging as toys and toothpaste.

China’s ability to manage the safety of its goods, Paulson said, will be an important part of Beijing’s future growth and of its trade relations with the United States. A complaint from some in China that the U.S. focus on the matter stems from a strategy to restrict Chinese imports, he said, “has no basis in fact.”

“American consumers need to have confidence in the safety of the products they purchase, whether produced at home or abroad,” Paulson said in a speech at the Asia Society, an education group.

Paulson and other senior Bush administration officials travel to China Dec. 12-13 for the talks’ third round. Paulson launched the effort a year ago, but so far it has produced few results. Vice Premier Wu Yi leads the Chinese side.

Paulson, in his speech, warned of misconceptions in the relationship “that are influencing the rise of protectionism and economic nationalism in both nations.”

He also defended the discussions for helping to improve communications among top officials, which was often lacking before. Critics say the dialogue produces more talk than results.

The meetings, Paulson said, “have helped keep the U.S.-China economic relationship on an even keel and helped us manage difficult issues, even in times of tension. Because we have a framework for senior-level dialogue, we can — and do — pick up the phone, and we talk.”

When the officials gather, Paulson is expected to continue to press China to move more quickly to institute economic reforms the Bush administration believes are necessary to deal with a huge trade gap between the two nations. The U.S. deficit with China hit an all-time high of $233 billion (euro158 billion) last year and is on track to surpass that total this year.

U.S. lawmakers are pushing the Bush administration to act more forcefully to get China to halt what critics see as unfair trade practices. They contend that China is manipulating its currency to keep the value low as a way of boosting Chinese imports into the United States while making U.S. goods more expensive in China.

Paulson also spoke about what he said were Chinese suspicions that the U.S. interest in currency appreciation is an attempt to gain a trade advantage. “Financial sector liberalization is not about foreign firms drilling holes in China’s economy,” he said.

In the United States, the exchange rate issue “has become a touchstone for broader anxieties about competition from China,” Paulson said, and he warned against succumbing to the “fear that, due to China’s rise, we will no longer be stewards of our own economic future.”

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