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Visit Of Vice PRemier Wu Yi

Floor Speech

Location: Washington, DC

VISIT OF VICE PREMIER WU YI -- (Senate - May 23, 2007)

Mr. OBAMA. Mr. President, I wish to comment on the visit of Chinese Vice Premier Wu Yi to Washington. This visit comes at an important time for the U.S.-China relationship and highlights the enormous stakes involved.

As I have said in the past, China's rise offers great opportunity but also poses serious challenges. It is critical the U.S. do all it can to ensure that China's rise is peaceful and its trade practices fair, and under those conditions, the United States should welcome China's continuing emergence and prosperity.

At the same time, we must remain prepared to respond should China's rise take a problematic turn. This means maintaining our military presence in the Asia-Pacific region, strengthening our alliances, and making clear to both Beijing and Taipei that a unilateral change in the status quo in the Taiwan Strait is unacceptable. Also, though today China's military spending is one-tenth of ours, we must monitor closely China's strategic capabilities while also pushing for greater transparency of its defense activities.

Although we must remain vigilant in monitoring these potential developments, our two nations also should strive to build a relationship that broadens areas of cooperation where we share mutual interests, as we have done to respond to the nonproliferation challenge posed by North Korea. And we should strengthen our ability to manage our differences effectively. While we must never hesitate to be clear and consistent with China where we disagree--whether on protection of intellectual property rights, the manipulation of its currency, human rights, or the right stance on Sudan and Iran--these differences, as a general rule, should not prevent progress in areas where our interests intersect.

Trade and economic issues, the subject of the upcoming Strategic Economic Dialogue, are one crucial example of the significant opportunities and challenges China's rise presents.

China is now the third largest economy in the world and is an increasingly formidable commercial competitor. But China also is our fastest growing overseas market, fueling over $50 billion in U.S. exports that help support thousands of export-related jobs. Many Americans also benefit from inexpensive Chinese products that keep down our cost of living, and China is an important link in the global supply chain that benefits U.S. commercial interests.

But none of that constitutes a reason to turn a blind eye to those ares of the economic relationship that are troubling. China ran a trade surplus with the United States of over $200 billion last year--the largest ever between any two countries--accounting for nearly a third of our total global trade deficit. Neither America nor the world can accept such imbalances, and if they remain, it is inevitable that there will be demands for protection in America and elsewhere.

I believe that the answer to the Chinese economic challenge is not to build walls of protection but to knock down barriers, demand fair treatment for our products and services, and increase our own competitiveness.

Much of the hard work to be done lies at home. We must implement policies to reduce our budget deficits and increase national savings--in order to reduce our dependence on borrowing to finance our deficits. We must ensure that our companies and workers have the tools they need to compete in the global economy. Among other things, this means stepping up our investments in education, training, and science and technology. We must make sure those Americans whose livelihoods are threatened by our changing economic relationship with China have access to the resources and support they need.

But China must bear a substantial share of the responsibility for restoring greater balance in its economic relations with the United States and the rest of the world. Just as the United States cannot unilaterally restore balance to China's economic relations, the United States alone cannot mute protectionist demands. China must itself act to bring greater balance in its global trade, so that all countries benefit from its growth.

I commend Treasury Secretary Paulson for pursuing a strategic economic dialogue with China, but it must produce meaningful and lasting results. Even as we develop a better understanding of how Chinese leaders view their own economic priorities, we need to confirm that these same leaders understand how the policies they pursue affect the United States and the global economy.

As a principal beneficiary of globalization, China needs to support and strengthen the international economic system as well. For example, it can and should take steps to increase consumption--drawing in more imports and reducing dependence on exports for growth. China needs a modem financial system to achieve this. American companies can help develop such a system but not if the playing field is unfairly tilted toward Chinese companies.

China can and should contribute to bolstering the world's economic system by allowing its currency, the renminbi, to be determined by market forces. Today, Beijing amasses as much as $20 billion a month in foreign currency, with the effects of keeping the renminbi substantially undervalued and giving China an undue advantage in trade. The recent move to widen the currency trading band is useful, but China must move more quickly toward a market-based currency.

China can and should contribute to the success of globalization by providing stronger protection of intellectual property rights. The fact that 80 percent of the pirated goods seized by U.S. Customs come from China is unacceptable. It suggests just how much work needs to be done in this area.

China can and should contribute to the world's economic health by altering its energy policies--addressing the needs of its people at home while not exacerbating problems abroad. Domestically, China's priority should be to increase energy efficiency. A system that requires twice as much energy as the United States to produce each dollar of economic growth is problematic.

At the same time, China needs to find cleaner sources of energy. Sixteen of the twenty cities with the worst air in the world are in China, and China is poised to overtake the United States in greenhouse gas emissions in 2 to 3 years. Just this week, a new report found that worldwide carbon dioxide levels have accelerated rapidly since 2000, in part because of China's reliance on coal.

China should rely on international energy markets to provide its oil and gas imports and work with the United States and others to develop common approaches to energy supplies and security. To continue seeking privileged arrangements with countries such as Sudan and Iran--states that commit gross human rights violations and that threaten to develop weapons of mass destruction--is to dramatically complicate efforts of the international community to address these questions and, in effect, to ratify these deeply troubling practices.

I hope Treasury Secretary Paulson can persuade the Chinese to change their practices. We will all be better off with a China whose emergence strengthens the international system rather than disrupts it.

China's economic growth is a good thing for China's 1.3 billion people, and can be a good thing for the United States. China is increasingly a constructive participant in the international system, and that trend should be supported and encouraged. But China cannot expect the United States and its overseas partners to tolerate unfair practices and glaring imbalances triggered by its rise. China needs to take steps that not only benefit its people but sustain the international system from which China itself benefits so greatly.

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