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TUESDAY, APRIL 18, 2006
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EDITORIAL

Bush must tread lightly with awakening dragon

Chinese President Hu Jintao arrives in Seattle today at the beginning of a trip that will eventually lead him to Washington, D.C.

But first on the foreign leader's itinerary are dinner with Microsoft chairman Bill Gates and a visit Wednesday to Boeing's Everett, Wash., plant. Last week, Beijing placed a tentative order for 80 Boeing jets.

President Hu's itinerary speaks loudly as to his agenda. Commerce is the main priority of the most populated and fastest-growing country in the world today. Diplomacy is almost a reluctant necessity.

A face-to-face meeting between Mr. Bush and Mr. Hu can accomplish much. The two leaders last met in New York in September.

Mr. Bush must remind Mr. Hu of the Chinese leader's pledge to "take effective measures to increase China's import from the United States." While the Boeing order is a good start, the annual U.S. trade deficit with China exceeded $201 billion last year, according to the U.S. Census Bureau's foreign trade statistics.

One way the Chinese leader can help balance that equation is to raise the currency exchange rate. Some experts believe Beijing is holding its currency 25 to 40 percent below what its free-market value would be. A purposely undervalued currency makes a country's exports cheaper than they would otherwise be, creating an unfair trade advantage.

Nucor Steel Corp. Chief Executive Dan DiMicco says the undervalued Chinese currency, combined with interest-free loans and export tax breaks, amount to "massively subsidized" Chinese steel mills.

"If China decides to export significant amounts of steel," Mr. DiMicco said, "there will be no such thing as competition."

Mr. Bush and Mr. Hu will have many other topics to discuss, including North Korea, Iran and Taiwan. They need to cooperate in the effort to prevent an avian flu pandemic.

And then there are human rights issues. But perhaps Mr. Bush is not the ideal candidate to lecture Mr. Hu about human rights violations.

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