Snow Says 'Quiet Diplomacy' on Chinese Trade Is Working

The Bush administration will push China on trade issues from currency reform to copyright piracy during a U.S. visit by China's president, Treasury Secretary John Snow said Wednesday.

Snow told a House subcommittee that the administration believed its campaign of "quiet diplomacy" was working to get China to let its currency's value rise against the dollar. He predicted more change in this area in coming months.

"They need to do more," he said. "They are being too cautious."

He was questioned by lawmakers on the currency issue, which critics see as a main contributing factor to America's soaring trade deficit with China, an imbalance that hit an all-time high of $202 billion last year.

Snow said the issue of currency valuations would be one of several economic topics President Bush would raise with President Hu Jintao, who is scheduled to make his first official visit to Washington beginning April 20.

The treasury secretary also told lawmakers he believed the administration's efforts were beginning to show results.

"I think they are making some progress," Snow said. "I prefer ... quiet diplomacy to other things. I think it is going to produce better results."

Snow cited a recent Wall Street forecast that China's currency would rise in value by 12 percent to 14 percent by the end of this year against the dollar, far more than the small 3 percent appreciation in the yuan that has occurred since last July.

"Over the course of this year and next, I think we are going to see the currency move more and move in a direction that causes it to have higher valuation," Snow said.

But he said it was unlikely the Chinese would move "in one fell swoop" to a system in which the yuan's value is allowed to be set entirely by market forces.

American manufacturers contend that the Chinese are keeping their currency's value artificially low against the dollar to make Chinese products cheaper for American consumers and American exports more expensive in China.

Snow said the administration wants China to do more to crack down on the copyright piracy of U.S. movies, music and computer programs. He said the administration also wants China to move faster to honor commitments to lower barriers to U.S. exports, commitments China made when it joined the World Trade Organization in 2001.

Administration officials hope to use Hu's visit and a meeting next Tuesday in Washington of the U.S.-China Joint Commission on Commerce and Trade, composed of top economic policymakers from both countries, to achieve trade concessions that will address the swelling trade gap.

"Our message to China is that we want to have economic engagement with you, but we want it to be mutually advantageous," Snow told lawmakers. "It has got to be a two-way street and you have got to address these issues like the currency, like intellectual property rights and counterfeiting.... You have got to open up your markets."

Snow's comments came during an appearance to discuss his department's budget request for the coming year.