No respite for China likely from new U.S. Congress

Published 10/07/2010, 08:40 PM
Updated 10/07/2010, 08:44 PM

* Republicans say currency focus too narrow

* Recent U.S. security moves enjoy bipartisan support

* More attention to Taiwan under Republicans?

By Paul Eckert

WASHINGTON, Oct 7 (Reuters) - A change of control of the U.S. Congress after next month's elections might take a harsh spotlight off China's currency, but direct it to other Chinese trade practices as well as security issues.

Under a consensus on the importance and outlines of the U.S.-China relationship, business-friendly Republicans have focused on security concerns and supported free trade. Democrats, backed by organized labor, have emphasized more diplomacy and called for fair trade.

In the Nov. 2 election for all 435 seats in the House of Representatives and 37 of the 100 places in the Senate, polls show Republicans appear poised to capture the Democratic majority in the House and to make strong gains in the Senate.

China has not emerged as a specific campaign issue, but in an election fought over Democratic President Barack Obama's handling of the economy and high unemployment, lawmakers of both parties will be taking swipes against Chinese policies.

In the last official business before they broke for the campaign, the House raised China's ire by passing, by a vote of 348-79, a law that would treat an undervalued Chinese currency as an unlawful subsidy that could be remedied by duties on selected Chinese goods. (http://r.reuters.com/dyw27p)

Ninety nine Republicans joined 249 Democrats to pass the bill, while five Democrats and 74 Republicans voted no.

A Republican party statement accompanying the vote voiced skepticism about pressuring China on the currency, but gave Beijing no quarter on other trade issues.

"We all believe that there are more important priorities in our trading relationship, and bigger barriers to U.S. exports than China's undervalued currency," said the Republicans.

"We are frustrated by China's continued bad faith and aggressive pursuit of protectionist policies that jeopardize our economic relationship," the opposition said.

The Republicans listed intellectual property theft, nontariff barriers, forced technology transfers and favoritism toward state-owned firms as "more pressing" China issues.

BIPARTISAN SUPPORT

Richard Fontaine, an expert at the Center for a New American Security, said Republican and Democratic party differences on China were a matter of emphasis rather than stark ideology.

"If there are more Republicans, you are likely to see an increase in the degree of skepticism about the future of the U.S.-China relationship," said Fontaine, who was a foreign policy adviser to John McCain's 2008 presidential campaign.

"You're not going to get Republicans who want to treat China as an adversary or contain China, but there might be less patience with some of China's recent activity" in the South China Sea and in waters near Japan, said Fontaine.

As the U.S.-China currency dispute was building this past summer, a new source of tension surfaced in the resource-rich South China Sea where China's sweeping territorial claims are contested by several smaller Southeast Asian nations. The Obama administration, without taking sides, urged a multilateral resolution to the dispute and freedom of navigation.

Washington also restated its support to its ally Japan in a tense spat with China last month over a Chinese fishing boat incursion in disputed waters in the East China Sea.

Kurt Campbell, assistant secretary of state for East Asian and Pacific Affairs, said moves by the U.S. administration to "step up our game in the Asian Pacific region" rested on a strong bipartisan foundation.

"One of the great things about Asian policy is, generally, it is a policy that has had very strong support on both sides of the political aisle," he said last week.

U.S. scrutiny on Chinese human rights practices has waned considerably in the decade since Washington granted Beijing permanent most-favored nation trade treatment, ending yearly reviews of China's rights record that were part of granting trade privileges on an annual basis, activists say.

But some legislators in both parties still champion civil and religious rights in China and there is sympathy for the Dalai Lama, the exiled Tibetan leader shunned by China as a separatist.

Taiwan, the self-ruled and democratic island China claims as sovereign territory has historically had more Republican than Democratic friends. Taipei's requests for advanced weapons to counter China's military build-up may get a greater hearing under a Republican-led Congress, analysts say. (Editing by Christopher Wilson)

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