February 15, 2012 6:25 pm

Obama attacks Chinese business practices

Barack Obama, the US president, took fresh aim at Chinese trade practices on Wednesday just as China’s leader-in-waiting used a visit to the US to try to mend fences with the American business community.

Both men travelled to the Midwest on Wednesday. However, they brought very different messages. Mr Obama used a campaign-style visit to a factory in Milwaukee to call for jobs to be “insourced” back from overseas.

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“I am not going to stand by when our competitors don’t play by the rules,” he said. The administration had set up a new trade enforcement unit and “it has only got one job: investigating unfair trade practices in countries like China”.

Mr Obama was speaking a day after meeting Xi Jinping, the Chinese vice-president in the White House, as part of a week-long visit that has been described as a “relationship-building” exercise with the man who could be in charge of China for the next decade. Mr Xi is expected to take over as president next year.

Mr Xi travelled to Iowa for a visit designed to highlight the growing volumes of imports to China from the US and the potential for Chinese investment.

His first stop was the small town of Muscatine, which he briefly visited 27 years ago when he was a low-level regional official on a delegation investigating pig farming techniques.

Mr Xi then attended a large dinner at the state capitol in Des Moines. Chinese officials pointed out that Iowa’s exports to China such as soyabeans have grown 1,200 per cent over the past decade.

He used a speech to a largely business audience earlier in the day to address some of the complaints about Chinese economic policies.

“China has become the United States’ fastest growing export market,” Mr Xi said. China’s trade surplus as a proportion of gross domestic product had shrunk from 7 per cent to 2 per cent, he added.

The sparring underlined the complicated diplomatic tango that governs US-China relations, a mixture of heavy pageantry, meticulous protocol and formal exchanges laced with the occasional public barb. On the eve of his trip, Mr Xi made some pointed criticisms about the US military build-up in the Asia-Pacific region.

Mr Xi’s visit to the US directly mirrors a trip 10 years ago by Hu Jintao, China’s current leader. Yet while Mr Hu came to Washington at a time when the US business community was solidly in support of engagement with China, Mr Xi has faced a very different audience in the US.

Although many US multinationals have established large operations in China and see the country as a central part of their long-term plans, corporate America also has a growing list of complaints about doing business in the country, ranging from intellectual property violations to heavy subsidies for Chinese state-owned companies.

On Capitol Hill, on Wednesday, a congressional panel designed to examine the national security implications of trade with China held a hearing on the subsidies directed to Chinese state-owned enterprises.

“This is a relationship in transition,” said John Frisbie, president of the US-China Business Council, a lobby group for multinationals active in China, which hosted a lunch for Mr Xi. “China has moved into a more prominent role globally, perhaps faster than expected, and is still adjusting to that role.”

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