SYDNEY (AFP) — US President George W. Bush urged China's consumers to spend more to help close a yawning trade gap with the United States Wednesday, as he prepared to meet Chinese counterpart Hu Jintao.
While trade will likely top the agenda at Thursday's talks, they are also expected to include prickly issues such as exchange rates and reported Chinese cyber-attacks on the Pentagon, reflecting a relationship Bush termed "complex."
"We certainly hope that China changes from a saving society to a consuming society," Bush told reporters ahead of the annual summit of the Asia-Pacific Economic Cooperation (APEC) forum in Sydney.
"We want the (Chinese) middle class to feel comfortable coming into the marketplace, the global marketplace, so that our producers can see the benefits directly with trade with China."
China's enormous trade surplus with the United States is a regular bone of contention in bilateral relations, with widespread American claims that jobs are being lost to the massive Chinese exporting machine.
The gap with China, which has the lion's share of imports into the United States, expanded to a record 21.16 billion dollars in June from 20.02 billion in May, according to US official data.
Most US criticism of the surplus is focused on the value of China's currency, said to be kept artificially low, but Bush focused on China's high savings rates ahead of his meeting with Hu.
"Right now, because of the lack of a (social) safety net, many Chinese save for what we call a rainy day," Bush said.
"What we want is the government to provide more of a safety net so they start buying more US and Australian products."
US Deputy National Security Advisor for International Economic Affairs Dan Price said he still expected exchange rates would be on the agenda as Bush and Hu "explored the contours" of the US-China economic relationship.
"It would not surprise me at all if exchange rates were discussed... it's a very important issue between the countries," Price told reporters, declining to speculate what course the discussion would take.
Economists have argued that a more expensive Chinese currency would not do much to shrink the overall US deficit as American importers would just move to other low-cost suppliers in different parts of the world.
They have argued that core issues include the unwillingness of the Chinese people to spend more on consumer goods, and conversely, an unwillingness on the part of many Americans to save.
"I will sit down with (Hu) and have a good honest, candid discussion, and he's going to tell me what's on his mind and I'm darned sure going to tell him what's on my mind," Bush said.
He suggested that he would address concerns the Chinese military might have penetrated into Pentagon computer systems.
"In terms of whether or not I will bring this up to countries... from which there may have been an attack, I may," Bush told reporters in Sydney after he was asked if he would raise the issue with Hu.
"Whether it be this issue, or issues like intellectual property rights, I mean, if you have a relationship with a country, then you've got to respect the country's systems and knowledge base. And that's what we expect from people with whom we trade."
The Pentagon said Tuesday that several nations and groups were trying to break into the US military's computer system after the Financial Times reported China's military had successfully hacked into the network in June.
Bush said that there were a number of issues where the United States and China did not see eye to eye, including China's treatment of dissidents and its policy on the Dalai Lama, Tibet's exiled spiritual leader.
"I want China to be more aggressive when it comes to Iran. I'm interested to hear President Hu Jintao's attitudes toward the humanitarian crisis in Darfur," said Bush.
"In other words, there's a lot of issues (where we) wish they would have a different lean to their policy... But it's best to be able to discuss these issues in an environment that is frank and open and friendly, as opposed to one in which there's tension and suspicion."
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