No More Valentines for Xi as China’s Heir Apparent Faces Bad Cop Congress

Chinese Vice President Xi Jinping, in line to become the country’s top leader next year, met congressional leaders amid criticism of China’s record on human rights, trade and currency issues.

Xi’s third day in Washington included sessions with Senate Majority Leader Harry Reid and his Republican counterpart Mitch McConnell, and with House Speaker John Boehner and House Majority Leader Eric Cantor, who raised questions on human rights and religious freedom and criticized intellectual property protections.

“The rhetoric out of the Congress on China is much more muscular and confrontational because they know they’re not running China policy; the White House is running China policy,” Robert Kapp, a business consultant focused on China and former president of the U.S.-China Business Council, said in a phone interview. “It’s a bad cop, good cop situation.”

With official pomp and ceremony out of the way, including a 19-gun salute at the Pentagon and a Valentine’s Day luncheon with red roses at the State Department yesterday, ambivalence reasserted itself. Congress and U.S. trade officials have criticized China for unfairly promoting domestic enterprises and failing to control intellectual-property theft, and the country’s economic practices have become a campaign issue ahead of the November U.S. presidential election.

Chinese Vice President Xi Jinping will meet today with Senate Majority Leader Harry Reid and his Republican counterpart Mitch McConnell, as well as House of Representatives Speaker John Boehner. Photo: Andrew Harrer/Bloomberg Close

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Chinese Vice President Xi Jinping will meet today with Senate Majority Leader Harry Reid and his Republican counterpart Mitch McConnell, as well as House of Representatives Speaker John Boehner. Photo: Andrew Harrer/Bloomberg

Prevent Politicization

At the meeting with Boehner and Cantor, the U.S. side delivered a letter about the plight of Gao Zhisheng, a human rights lawyer imprisoned in China, according to a summary of the meeting released by the speaker’s office. Boehner told Xi that China’s enforcement of intellectual property laws was deficient, and Cantor expressed disappointment over China’s veto last week of a United Nations Security Council resolution on Syria, according to the summary.

Xi, in a speech to a packed ballroom at the Marriott hotel where he stayed in Washington, called on the U.S. to respect China’s interests in international relations, and work to adjust its own economic policies to accommodate China’s priorities, including import of technology products.

Xi also said that China hoped the U.S. would “truly honor its commitment” to oppose Tibetan independence.

Near the hotel, members of the dissident Falun Gong spiritual sect, which is banned in China, staged a sit-in next to a Chipotle Mexican Grill, and supporters of the Chinese vice president waved Chinese flags.

Avoid ‘Undue Interference’

Xi yesterday told a roundtable with business executives at the U.S. Chamber of Commerce in Washington that the two sides must make an effort to more “effectively prevent politicizing economic issues and avoid various kinds of undue interference.” When President Hu Jintao visited the U.S. in 2011, Reid called him a “dictator” and some members of Congress, including Boehner, stayed away from his state dinner.

More criticism emerged today as some lawmakers spoke before the U.S.-China Economic and Security Review Commission, a panel of attorneys, business leaders and former congressional staffers that submits an annual report to Congress on security implications of the U.S. economic relationship with China and makes policy recommendations.

“China has consistently demonstrated that they are not adhering to fair trading rules, that they are providing illegal subsidies to their industries, and that they are dumping their products on our shores,” Indiana Democratic Representative Peter Visclosky told the panel. “They have repeatedly shown their neglect in enforcing environmental and labor standards.”

Foreign ‘Leg Up’

Obama also called attention to trade practices, citing China specifically, a day after meeting Xi.

“It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized,” the president said in remarks in Milwaukee on his way to the West Coast for campaign fundraisers. “That’s why I directed my administration to create a Trade Enforcement Unit with one job: investigating unfair trade practices in countries like China. American workers are the most productive on Earth, and if the playing field is level, I promise you -- America will always win.”

Obama on Feb. 13 asked Congress in his next budget for $26 million and at least 50 people for a new panel to investigate unfair trade practices by China and other countries.

The comments echoed a running theme in Vice President Joe Biden’s speeches yesterday as he squired Xi around Washington.

Rules of Game

“Competition can only be mutually beneficial if the rules of the game are understood, agreed upon and followed,” Biden told the business roundtable.

Obama filed five World Trade Organization complaints against China since taking office three years ago. The U.S. and China have clashed over access to each others’ markets for products including steel pipes, poultry, tires and music.

The U.S.-China trade deficit was $295 billion last year. The imbalance is a main source of friction between the two countries.

Obama administration officials and foreign policy experts say the trip may be most important for developing relationships between Xi and Washington’s military and political leaders. He is expected to become president in a leadership transition that ends early next year.

‘Open to Dialogue’

Xi Jinping has to demonstrate to the U.S. that he is open to a dialogue about some of the crucial economic and financial issues,” said Andrew Collier, an independent China analyst and former president of the Bank of China International USA. “This is particularly important to a Congress that in the past has been hostile toward China’s exchange rate and trade policies, and the dialogue becomes more heated in the face of a change of leadership that is occurring in both countries.”

At a briefing last night, Vice Commerce Minister Gao Hucheng announced a Chinese plan to purchase $27 billion in U.S. goods, including chips, machinery and electronic materials.

Xi’s next stop is Iowa (BEESIA), a state he first visited 27 years ago, where his message of an economic relationship based on mutual benefit may receive less interference from the human rights and global security issues raised in Washington.

The White House released a joint statement on economic issues yesterday saying China will allow foreign-invested insurance companies to sell third-party liability insurance for motor vehicles, and the two countries announced plans to develop global guidelines for export financing, with the goal of reaching an agreement by 2014.

To contact the reporters on this story: Dune Lawrence in New York at dlawrence6@bloomberg.net; Eric Martin in Washington at emartin21@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; Peter Hirschberg at phirschberg@bloomberg.net

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